CBSE Class 12 Accountancy – MCQ and Online Tests – Unit 7 – Issue and Redemption of Debentures
Every year CBSE conducts board exams for 12th standard. These exams are very competitive to all the students. So our website provides online tests for all the 12th subjects. These tests are also very effective and useful for those who preparing for competitive exams like NEET, JEE, CA etc. It can boost their preparation level and confidence level by attempting these chapter wise online tests.
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CBSE Class 12 Accountancy – MCQ and Online Tests – Unit 7 – Issue and Redemption of Debentures
Question 1.
Premium on redemption of debentures is generally provided at the time of ……………
(a) Issue of debentures
(b) Redemption of debentures
(c) Writing off
(d) After 10 years
Answer
Answer: (b) Redemption of debentures
Question 2.
If debentures purchased in open market are not immediately cancelled, they are treated as :
(a) Current Assets
(b) Current Liabilities
(c) Investment
(d) Capital
Answer
Answer: (c) Investment
Question 3.
When all debentures are redeemed, balance in the Debenture Redemption Fund Account is transferred to:
(a) Capital Reserve
(b) General Reserve
(c) Profit & Loss Appropriation A/c
(d) None of these
Answer
Answer: (a) Capital Reserve
Question 4.
Premium on redemption of debentures is a :
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Suspense A/c
Answer
Answer: (c) Nominal A/c
Question 5.
Sources of finance of the redemption of debentures are:
(a) Redemption out of profits
(b) Redemption out of capital
(c) The proceeds from fresh issue of shares/debentures
(d) All the above
Answer
Answer: (d) All the above
Question 6.
A company issued 1,000, 12% debentures of ₹ 100 each at 10% premium. 12% stand for:
(a) Rate of dividend
(b) Rate of Tax
(c) Rate of interest
(d) None of these
Answer
Answer: (c) Rate of interest
Question 7.
According to SEBI guidelines, a Company will have to create debenture redemption reserve equivalent to the amount of the following percentage of debenture issued:
(a) 50%
(b) 25%
(c) 70%
(d) 100%
Answer
Answer: (b) 25%
Question 8.
A company should transfer to Debenture Redemption Reserve A/c at least what percent of the amount of debentures issued before the commencement of redemption of debentures-
(a) 50%
(b) 25%
(c) 15%
(d) 100%
Answer
Answer: (b) 25%
Question 9.
Loss on Issue of Debenture Account is shown:
(a) On Assets side of Balance Sheet
(b) On Liabilities side of Balance Sheet
(c) On Credit side of P & L Account
(d) None of these
Answer
Answer: (a) On Assets side of Balance Sheet
Question 10.
Debentures cannot be redeemed at:
(a) Par
(b) Premium
(c) Discount
(d) More than 10% premium
Answer
Answer: (c) Discount
Question 11.
The balance of ‘Sinking Fund Account’ after the redemption of debentures is transferred to :
(a) Profit & Loss Account
(b) Profit & Loss Appropriation Account
(c) General Reserve Account
(d) Sinking Fund Account
Answer
Answer: (c) General Reserve Account
Question 12.
Profit on sale of Sinking Fund Investment is transferred to:
(a) Profit & Loss Account
(b) General Reserve
(c) Sinking Fund Account
(d) Capital Reserve
Answer
Answer: (c) Sinking Fund Account
Question 13.
Premium on Redemption of Debentures A/c is:
(a) Asset
(b) Expenses
(c) Liability
(d) Revenue
Answer
Answer: (c) Liability
Question 14.
If redemption of debentures is made by conversion method, the amount to be transferred to ‘Debenture Redemption Reserve Account’ will be equal to…….percent of converted amounted.
(a) 40
(b) 50
(c) 60
(d) Not required
Answer
Answer: (d) Not required
Question 15.
Interest on sinking fund investment is credited to :
(a) Profit & Loss A/c
(b) Sinking Fund A/c
(c) General Reserve A/c
(d) Sinking Fund Investment A/c
Answer
Answer: (b) Sinking Fund A/c
Question 16.
Profit on cancellation of own debentures is transferred to:
(a) Profit & Loss Account
(b) Profit & Loss Appropriation Account
(c) General Reserve Account
(d) Capital Reserve Account
Answer
Answer: (d) Capital Reserve Account
Question 17.
Sinking fund investment is:
(a) An Income
(b) An exause
(c) An Asset
(d) A Liability
Answer
Answer: (c) An Asset
Question 18.
Own debentures are those debentures of the company which ?
(a) The company allots to its own promotors
(b) The company allots to its directors
(c) The company purchases from the markets and hold them as investments
(d) None of these
Answer
Answer: (c) The company purchases from the markets and hold them as investments
Question 19.
When debentures are redeemed out of profits, an equivalent amount is transferred to :
(a) General Reserve
(b) Debenture Redemption Reserve
(c) Capital Reserve
(d) Profit & Loss A/c
Answer
Answer: (b) Debenture Redemption Reserve
Question 20.
When debentures are issued at par and are redeemable at a premium, the loss on such an issue is debited to :
(a) Profit & Loss A/c
(b) Debenture Application and Allotment A/c
(c) Loss on Issue of Debentures A/c
(d) Premium on Redemption A/c
Answer
Answer: (c) Loss on Issue of Debentures A/c
Question 21.
When debentures are issued at a discount and are redeemable at a premium, which of the following accounts is debited at the time of issue ?
(a) Debentures A/c
(b) Premium on Redemption of Debentures A/c
(c) Loss on Issue of Debentures A/c
(d) Profit & Loss A/c
Answer
Answer: (c) Loss on Issue of Debentures A/c
Question 22.
Debentures can be redeemed out of:
(a) Profit
(b) Capital
(c) Provision
(d) All of the above
Answer
Answer: (d) All of the above
Question 23.
Profit on redemption of debentures in transferred to which account ?
(a) Capital Reserve Account
(b) Sinking Gund Account
(c) General Reserve Account
(d) Profit & Loss Account
Answer
Answer: (a) Capital Reserve Account
Question 24.
Profit on sale of debentures redemption fund investment in the first instance in credited to :
(a) Debenture Redemption Fund A/c
(b) Profit & Loss Appropriation A/c
(c) General Reserve A/c
(d) Sinking Fund A/c
Answer
Answer: (a) Debenture Redemption Fund A/c
Question 25.
Profit on cancellation of own debentures is :
(a) Revenue Profit
(b) Capital Profit
(c) Operating Profit
(d) Trading Profit
Answer
Answer: (b) Capital Profit
Question 26.
6,000 debentures of ₹ 10 each where discharged by issuing equity shares of ₹ 10 each at 20% premium. The number of shares issued will be :
(a) 50,000
(b) 60,000
(c) 5,000
(d) 6,000
Answer
Answer: (c) 5,000
Question 27.
Every company required to create DRR shall on or before the 30th April of each year, deposit or invest, a sum which shall not be less than…………of the amount of its debentures maturing (to be redeemed) during the year ending on 31st March of the next year.)
(a) 10%
(b) 15%
(c) 25%
(d) 50%
Answer
Answer: (b) 15%
Question 28.
According to SEBI guidelines what percentage of the amount of debentures must be transferred to Debenture Redemption Reserve, before the commencement of redumption of debentures, in case of convertible debentures ?
(a) 25%
(b) 50%
(c) 100%
(d) zero
Answer
Answer: (d) zero
Question 29.
A Sinking Fund is a part of:
(a) Fixed Liabilities
(b) Current Liabilities
(c) Reserves and Surplus
(d) Fixed Assets
Answer
Answer: (c) Reserves and Surplus
Question 30.
A company issued 1000, 12% debentures of ₹ 100 each at 10% premium. 12% stand for :
(a) Rate of Dividend
(b) Rate of Tax
(c) Rate of Interest
(d) None of these
Answer
Answer: (c) Rate of Interest
Question 31.
On liquidation of a company, principal amount of debentures is returned:
(a) First of all
(b) Last of all
(c) Before Equity Capital
(d) None of those
Answer
Answer: (a) First of all
Question 32.
BST Ltd. want to redeem its 900, 10% debentures at 105% by converting them into shares of ₹ 10 each at ₹ 9 each. The number of shares to be issued will be :
(a) 9,000 Shares
(b) 10,500 Shares
(c) 10,000 Shares
(d) 8,500 Shares
Answer
Answer: (b) 10,500 Shares
Question 33.
‘Premium on Redemption of Debentures A/c is in the nature of:
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these
Answer
Answer: (c) Nominal A/c
Question 34.
Debenture is a :
(a) Loan certificate
(b) Cash certificate
(c) Credit certificate
(d) None of these
Answer
Answer: (a) Loan certificate
Question 35.
Debentures represent:
(a) Director’s Share in a Company
(b) Investments by Equity Shareholders
(c) Long-term Debt of the Business
(d) None of these
Answer
Answer: (c) Long-term Debt of the Business
Question 36.
Debenture holders are the :
(a) Customers of the Company
(b) Owners of the Company
(c) Creditors of the Company
(d) None of these
Answer
Answer: (c) Creditors of the Company
Question 37.
In case of issue of debentures as a collateral security for loan from the bank which account will be debited :
(a) Bank Account
(b) Bank Loan Account
(c) Debentures Account
(d) Debentures Suspense Account
Answer
Answer: (d) Debentures Suspense Account
Question 38.
Deep Ltd. issue 10,00,000, 7 % debentures of 100 Rs. each at a discount of 4%, redeemable after 5 years at a premium of 6%. Loss issue of debentures is :
(a) ₹ 10,00,000
(b) ₹ 6,00,000
(c) ₹ 16,00,000
(d) ₹ 4,00,000
Answer
Answer: (a) ₹ 10,00,000
Question 39.
If debenture of ₹ 1,00,000 were issued for discount of ₹ 10,000, which are redeemable after four years. Then amount of discount to be written off from P. & L. Account each year is :
(a) ₹ 3,000
(b) ₹ 4,000
(c) ₹ 2,500
(d) ₹ 5,000
Answer
Answer: (c) ₹ 2,500
Question 40.
Debentures which are transferred by mere delivery are called:
(a) Registered Debentures
(b) First Debentures
(c) Bearer Debentures
(d) None of these
Answer
Answer: (c) Bearer Debentures
Question 41.
In the Balance Sheet of a Company, Debentures are shown under the head :
(a) Unsecured Loans
(b) Long-term Loans
(c) Current Liabilities
(d) Reserve and Surplus
Answer
Answer: (b) Long-term Loans
Question 42.
If debentures of ₹ 4,50,000 are issued for the consideration of net assets of ₹ 5,00,000 balance ₹ 50,000 will be credited to:
(a) Profit & Loss A/c
(b) Goodwill A/c
(c) General Reserve A/c
(d) Capital Reserve A/c
Answer
Answer: (d) Capital Reserve A/c
Question 43.
Discount on issue of Debentures is in the nature of:
(a) Revenue Loss
(b) Capital Loss
(c) Deferred Revenue Expenditure
(d) None of there
Answer
Answer: (b) Capital Loss
Question 44.
Debentures cannot be redeemed at:
(a) Premium
(b) Discount
(c) Par
(d) None of these
Answer
Answer: (b) Discount
Question 45.
Interest payable on debentures is :
(a) An appropriation of profits of the company
(b) A charge against profits of the company
(c) Transfer to Sinking Fund
(d) None of the above
Answer
Answer: (b) A charge against profits of the company
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