Accountancy MCQs for Class 12 with Answers Chapter 8 Issue of Debentures with Answer

Accounts MCQ Class 12 : Accountancy MCQs for Class 12 with Answers Chapter 8 “Issue of Debentures“. Practicing CBSE RBSE and NCERT Accountancy MCQ Questions for Class 12 with Answers is one of the best ways to prepare for the CBSE Class 12 board exam.

Accountancy MCQs for Class 12 with Answers Chapter 8 Issue of Debentures with Answer

Accountancy MCQs for Class 12 with Answers Chapter 8 Issue of Debentures with Answer

Question: Which of the following is not a characteristic of Bearer Debentures?

a) Their transfer requires a deed of transfer

b) They are treated as negotiable instruments

c) They are transferable by mere delivery

d) The interest on it is paid to the holder irrespective of identity

Answer: Their transfer requires a deed of transfer


Question: Which of the following is/are true with respect to debentures?

a) Both

b) They can be issued for cash

c) They can be issued for consideration other than cash

d) None of the options

Answer: Both


Question: When debentures are issued as collateral security, the final entry for recording the transaction in the books is

a) Debit debenture suspense a/c. and credit debentures a/c.

b) Credit debentures a/c. and debit cash a/c.

c) Debit debenture suspense a/c. and credit cash a/c.

d) None of the options

Answer: Debit debenture suspense a/c. and credit debentures a/c.


Question: Which of the following is false with respect to debentures?

a) They can be issued in lieu of dividends

b) They can be issued for cash

c) They can be issued for consideration other than cash

d) They can be issued as collateral security

Answer: They can be issued in lieu of dividends


Question: Which of the following is true with regard to 10% Debentures issued at a discount of 20%

a) The face value and the carrying amount of debentures are equal.

b) The carrying amount of debentures gets reduced each year at a rate of 20%

c) Issue price and the carrying amount of debentures are equal

d) At the time of redemption, the debenture holder will be paid the issue price

Answer: The face value and the carrying amount of debentures are equal.


Question: Which of the following statements is false?

a) The issue price and redemption value of debentures cannot differ.

b) Debenture is a form of public borrowing

c) It is customary to prefix debentures with the agreed rate of interest

d) Debenture interest is a charge against profits

Answer: The issue price and redemption value of debentures cannot differ.


Question: As per the Companies Act, Interest accrued and due on debentures should be shown Under

a) Debentures.

b) Capital

c) Shares

d) None of the options

Answer: Debentures.


Question: Which of the following statements is true?

a) A debenture issued at a discount can be redeemed at a premium

b) A debenture holder is an owner of the company

c) A debenture holder can get his money back only on the liquidation of the company

d) A debenture holder receives interest only in the event of profits

Answer: A debenture issued at a discount can be redeemed at a premium


Question: Which of the following statements is false?

a) Debentures cannot be secured

b) A company can issue convertible debentures

c) A company can issue redeemable debentures

d) Debentures have no right to participate in profits over and above their fixed interest

Answer: Debentures cannot be secured


Question: Perpetual debentures are also known as

a) Irredeemable debentures

b) Secured Debentures

c) Unsecured Debentures

d) None of the options

Answer: Irredeemable debentures


Question: Debenture premium cannot be used to

a) Pay dividends

b) Write off the discount on issue of shares or debentures

c) Write off the premium on redemption of shares or debentures

d) Write off capital loss

Answer: Pay dividends


Question: Loss on issue of debentures is treated as

a) Miscellaneous expenditure

b) Intangible asset

c) Current asset

d) Current liability

Answer: Miscellaneous expenditure


Question: Secured Debentures is known as

a) Mortgage debentures

b) Naked debentures

c) Unsecured Debentures

d) None of the options

Answer: Mortgage debentures


Question: Unsecured Debentures is known as

a) Simple or Naked debentures

b) Mortgage debentures

c) Secured Debentures

d) None of the options

Answer: Simple or Naked debentures


Question: Which of the following is not true about debenture stock:

a) Debenture stock are identified by their distinct number

b) It must be fully paid.

c) Debenture Stock can be transferred in fraction.

d) None of the options

Answer: Debenture stock are identified by their distinct number


Question: Which is an agreement between the company and the trustees to look after the interest of debenture holders.

a) Debenture trust deed

b) Partnership deed

c) Both

d) None of the options

Answer: Debenture trust deed


Question: A company can not issue

a) Debentures with voting rights

b) Share

c) Debentures

d) None of the options

Answer: Debentures with voting right


Question: Which of the following is false?

a) Interest on debentures is an appropriation of profits.

b) Equity is owners stake and the debenture is a debt

c) Rate of interest on debentures is fixed

d) Debenture holders get preferential treatment over the equity holders at the time of liquidation

Answer: Interest on debentures is an appropriation of profits.


Question: Discount on issue of debentures is a

a) Capital loss to be written off over the tenure of the debentures

b) Revenue loss to be charged in the year of issue

c) Capital loss to be written off from capital reserve

d) Capital loss to be shown as goodwill

Answer: Capital loss to be written off over the tenure of the debentures


Question: Debentures are shown in the balance sheet of a company under the head of

a) Non current Liabilities

b) Current Liabilities

c) Share Capital

d) None of the options

Answer: Non current Liabilities


Question: When debentures are issues at discount , the discount should be written off

a) During the life of the debentures

b) In the year of the issue of debentures

c) Within 5 years of the issue of the debentures

d) None of the options

Answer: During the life of the debentures


Question: Debenture holder are

a) The creditors of the company

b) The owners of the company

c) The vendors of the company

d) None of the options

Answer: The creditors of the company


Question: Debenture interest is paid

a) At a pre determined rate

b) At variable rate

c) 25% of Profit

d) None of the options

Answer: At a pre determined rate


Question: At the time of issue of debentures , debenture Account is

a) Credited by the face value of debentures

b) Credited by the Amount received

c) Credited by the issue price of debentures

d) None of the options

Answer: Credited by the face value of debentures


Question: Discount or loss on issue of debentures to be written of within after 12 months from the date of balance sheet or after the period of operating cycle is shown as

a) Other Non current Assets

b) Other Current assets

c) Other Current Liabilities

d) None of the options

Answer: Other Non current Assets


Question: Discount or loss on issue of debentures to be written of within 12 months from the date of balance sheet or within the period of operating cycle is shown as

a) Other Current assets

b) Other Non current Assets

c) Other Current Liabilities

d) None of the options

Answer: Other Current assets


Question: Debenture is a

a) Long term Loan

b) Short term loan

c) Dividend

d) None of the options

Answer: Long term Loan


Question: Which does not have possess the voting right

a) Debenture Holder

b) Share Holder

c) Both

d) None of the options

Answer: Debenture Holder


Question: A written promise for a debt by a company under its seal which contains the terms and conditions regarding the amount of loan

a) Debenture

b) Share

c) Capital

d) None of the options

Answer: Debenture


Question: Debenture holders are entitled the right to receive

a) Interest

b) Dividend

c) Both

d) None of the options

Answer: Interest


Ques. Debentures of a Company can be issued :

(A) For Cash

(B) For Consideration other than Cash

(C) As a Collateral Security

(D) Any of the above

 Answer: D


Ques. On issue of debentures as a collateral security, which account is credited?

(A) Debentures Account

(B) Bank Loan Account

(C) Debenture Holdings Account

(D) Debenture Suspense Account

 Answer: A


Ques. Debentures issued as collateral security will be debited to :

(A) Bank Account

(B) Debentures Suspense Account

(C) Debentures Account

(D) Bank Loan Account

Answer: B


Ques. On liquidation of company, principal amount of debentures is returned :

(A) First of All

(B) Last of All

(C) Before Equity Capital

(D) After Equity Capital

 Answer: C


Ques. Which of the following statements is false?

(A) Debenture is a form of public borrowing.

(B) It is customary to prefix debentures with the agreed rate of interest.

(C) Debenture interest is a charge against profits.

(D) The issue price and redemption value of debentures cannot differ.

 Answer: D


Ques. Which of the following is not a characteristic of Bearer Debentures?

(A) They are treated as negotiable instruments.

(B) Their transfer requires a deed of transfer.

(C) They are transferable by mere delivery.

(D) The interest on it is paid to the holder irrespective of identity.

 Answer: B


Ques. When debentures are to be redeemed at premium an extra entry has to be made at the time of issue of debentures, which a/c should be credited in this entry?

(A) Loss on issue of debentures a/c

(B) Debenture redemption premium a/c

(C) Bank a/c

(D) Debenture holder’s a/c

 Answer: B


Ques. Premium on Redemption of Debentures Account is :

(A) Personal Account

(B) Real Account

(C) Nominal Account

(D) All of the Above

 Answer: A


Ques. X Ltd. acquired assets of Rs.20 lakhs and took over creditors of Rs.20 thousand from LLtd. XLtd. issued 8% debentures of Rs.200 each at a discount of 10% as purchase consideration. Number of debentures issued will be :

(A) 11,000

(B) 9,000

(C) 10,000

(D) 10,100

 Answer: A


Ques. Globe Ltd. issues 20,000, 9% debentures of Rs. 100 each at a discount of 5% redeemable at the end of 5 years at a premium of 6%. For what amount ‘Loss on Issue of Debentures Account’ will be debited?

(A) Rs. 1,00,000

(B) Rs. 1,20,000

(C) Rs.2,80,000

(D) Rs.2,20,000

 Answer: D


Ques. Issued 5,000, 12% debentures of Rs. 100 each at a discount of 2%, redeemable at a premium of 5%. In such case :

(A) Loss on Issue will be Credited by Rs. 10,000.

(B) Loss on Issue will be debited by Rs.35,000.

(C) Premium on Redemption will be debited by Rs.25,000.

(D) Premium on Redemption will be credited by Rs.35,000.

 Answer: B


Ques. Issued 4,000, 12% debentures of Rs. 100 each at a premium of 4%, redeemable at a premium of 10%. In such case :

(A) Loss on Issue will be debited by Rs.24,000

(B) Loss on Issue will be debited by Rs.56,000

(C) Loss on Issue will be debited by Rs.40,000

(D) Premium on Redemption will be credited by Rs.24,000

 Answer: C


Ques. When debentures are issued at a discount, the discount is written off

(a) after debentures have been redeemed.

(b) in the year when debentures are issued,

(c) during the life of the debentures.

(d) None of these.

 Answer: B


Ques. Interest on Debentures is paid on

(a) Amount received on Issue.

(b) Nominal (Face) Value.

(c) On Premium.

(d) None of these.

 Answer: B


Ques. Debentures issued as Collateral Security

(a) are recorded in the books.

(b) are not recorded in the books.

(c) may or may not be recorded in the books.

(d) None of these.

 Answer: C


Ques. Which of the following statements is false?

(A) At maturity, debenture holders get back their money.

(B) Debentures can be forfeited for non-payment of call money.

(C) In company’s balance sheet, debentures are shown under the head Long term Borrowings.

(D) Interest on debentures is a charge against profits.

 Answer: B


Ques. Which of the following statements is false :

(A) A Company can issue redeemable debentures.

(B) A Company can issue debentures with voting rights.

(C) A Company can issue convertible debentures.

(D) A Company can buy its own debentures and shares.

 Answer: B


Ques. The Principal amount of debentures will be repaid by the company either at the end of a specified period or by instalments during the life time of the company. Such types of debentures are called :

(A) Redeemable Debentures

(B) Irredeemable Debentures

(C) Convertible Debentures

(D) Bearer Debentures

 Answer: A


Ques. If Vendors are issued debentures of Rs.4,40,000 in consideration of assets of Rs. 5,00,000 and liabilities of Rs. 1,00,000, the balance of Rs.40,000 will be debited to:

(A) General Reserve Account

(B) Capital Reserve Account

(C) Goodwill Account

(D) Statement of Profit & Loss

 Answer: C


Ques. A Ltd. issued 1,000, 10% debentures of Rs. 100 each at a premium of 5%. What will be the total amount of interest for one year :

(A) Rs. 10,500

(B) Rs. 10,000

(C) Rs. 5,250

(D) Rs. 5,000

 Answer: B

Accountancy MCQs for Class 12 Chapter Wise with Answers Pdf Download

MCQs for Class 12 Accountancy Chapter 1 Accounting for Partnership Firms — Fundamentals
MCQs for Class 12 Accountancy Chapter 2 Change in Profit Sharing Ratio among the Existing Partners
MCQs for Class 12 Accountancy Chapter 3 Admission of a Partner
MCQs for Class 12 Accountancy Chapter 4 Retirement or Death of a Partner
MCQs for Class 12 Accountancy Chapter 5 Dissolution of a Partnership Firm
MCQs for Class 12 Accountancy Chapter 6 Financial Statements of Not-for-Profit Organisations (N.P.O.)
MCQs for Class 12 Accountancy Chapter 7 Issue of Shares
MCQs for Class 12 Accountancy Chapter 8 Issue of Debentures
MCQs for Class 12 Accountancy Chapter 9 Redemption of Debentures
MCQs for Class 12 Accountancy Chapter 10 Financial Statements of Companies
MCQs for Class 12 Accountancy Chapter 11 Financial Statements Analysis
MCQs for Class 12 Accountancy Chapter 12 Comparative Statements
MCQs for Class 12 Accountancy Chapter 13 Common Size Statements
MCQs for Class 12 Accountancy Chapter 14 Accounting Ratios
MCQs for Class 12 Accountancy Chapter 15 Cash Flow Statement

Accountancy MCQs for Class 12 Chapter Wise with Answers Pdf Free Download will help you. Accountancy MCQs for Class 12 with Answers Chapter 8 Issue of Debentures with Answer