Xii Mcqs CH - 11 Redemption of Debentures
Xii Mcqs CH - 11 Redemption of Debentures
Q1 If debentures of Rs 50,000 are issued at par but redeemable at a premium of 10%. By what principle
of accounting, the loss on issue of debentures account will be debited with ` 5,000 while passing the
issue entry ?
(a) Principle of Revenue recognition
(b) Principle of Materiality
(c) Principle of Conservatism/Prudence
(d) Principle of Full Disclosure.
Q2. X Ltd. has issued 10,000 6% debentures of ` 100 each. The company decided to redeem half of its
debentures at 10% premium. There was a balance of ` 3,40,000 in Debenture redemption reserve. As per
SEBI guidelines what amount still need to be transferred to Debenture redemption reserve account out
of profits.
(a) Rs6,60,000
(b) Rs1,60,000
(c) Rs 5,50,000
(d) Rs 2,75,000
Q4Alfa Ltd. issued 20,000, 8% debentures of Rs 10 each at par. The debentures are redeemable at a
premium of 20% after 5 years. The amount of loss on redemption of debentures should be:
(a) Rs 50,000
(b) Rs 40,000
(c) Rs 30,000
(d) Rs 16,000
Q7 . Gaurav Ltd. purchased machinery costing Rs 1,71,000. It was agreed that the purchase
consideration be paid by issuing 12% debentures of Rs 100 each. Assume debentures have been issued
at a discount of 10%. No. of debentures issued to vendor are:
(a) 1500
(b) 1900
(c) 2000
(d) 2100
Q8 In case the question is silent, DRR is created on the nominal value of outstanding redeemable
debentures to the extent of
a.25%
b.15%
c.more than 25%
d.any of the above
Q10 If debentures are issued at par and redeemed at a premium then which account will be debited by
the amount of premium on debentures.
a. Discount on issue of debentures
c. Premium on redemption of debentures
c. Profit and loss account
d. Loss on issue of debentures
Q11 The provisions of the Companies Act 2013 in respect of redemption of debentures are to protect
the interest of
a)Debetureholders
b)Creditors
c)Shareholdres
d)Bankers
Q12 Best Company Ltd decides to redeem 10000 ,10% debentures of Rs 100 each on 30th June 2018.The
Company shall invest in specified securities on or before
a. 30th April 2017
b. 30th April 2016
c. 30th June 2017
d. 30th April 2018
Q16 Once the debentures are redeemed, amount of debenture redemption reserve is transferred to
a. Capital Reserve
b. Balance in Profit and loss account
c. General Reserve
d. Capital Redemption reserve
Q17 G Limited has outstanding 10000 8% debentures of Rs 100 each that are redeemable at a premium
of Rs 10.Out of these 5000 debentures are to be redeemed on 31st December 2018 Debenture redemption
Investment should be
a.75,000
b.82,500
c.1,50,000
d.1,65,000
Q18 Global savings Bank is to redeem 40000 10% debentures of Rs 100 each on 31st December
2018.How much amount should it invest in specified securities?
a.6,00,000
b.10,00,000
c. 5,00,000
d. Nil
Q19 H Limited has outstanding 10,000 , 8% debentures of Rs 100 each that are redeemable at a
premium of Rs 10 each. Out of these 5000 debentures are to be redeemed on 31st December
2018.Denture redemption investment should be
a.75,000
b. 82,500
c. 1,50,000
d.1,65,000
1. Debentures are redeemed setting aside 25% of the nominal value of debentures to Debenture
Redemption Reserve .It is redemption out of _______________
2. Amount to be set aside to ____________before redemption of debentures.
3. Debenture Redemption Investment should be made _____________30th April of the year in
which debentures re redeemed.
4. Discount or loss on issue of debentures is a ______________
5. Once the debentures re redeemed ,amount of DRR is transferred to _____________
ANSWER KEY
REDEMPTION OF DEBENTURES
Ques 1 2 3 4 5 6 7 8 9 10
No
ns c b a b a a b a b d
Ques 11 12 13 14 15 16 17 18 19 20
No
ns a d d c a a a d a c
Ques 1 2 3 4 5
No
ns Profit DRR On or Capita Gener
and before l loss al
capita reserv
l e
True or False
Ques 1 2 3 4 5
No
ns T F F T T