62.
When full amount is due on any call but it is not received, then the short fall
is debited to :
(a) Calls-in-advance
(b) Calls-in-arrear
(c) Share Capital
(d) Suspense Account
63. The difference between subscribed capital and called up capital is called :
(a) Calls-in-arear
(b) Calls-in-advance
(c) Uncalled capital
(d) None of these
64. Which statement is issued before the issue of shares ?
(a) Prospectus
(b) Articles of Association
(c) Memorandum of Association
(d) All of these
65. Company can utilise securities premium for :
(a) Writing off loss incurred on revaluation of asset
(b) Issuing fully paid bonus shares
(c) Paying dividend
(d) Writing off trading loss
ANSWER KEY
ANSWER KEY
i. MULTIPLE CHOICE QUESTIONS
1. A
2. D
3. A
4. A
5. B
6. B
7. B
8. A
9. C
10. C
.11 (B) 90% of the issued amount
12 (A) Authorized capital
13. (D) Nil
14. (C) 50,000
15 (B) Rs. 4,000
16 (C) Unissued Capital
17 (D) Employees Stock Option plan (ESOP)
18 (A) On the Equity and Liabilities side of the Balance Sheet
19 (D) Forfeited shares
20 (C) Security premium Reserve Account
21 C
22 C
23 C
24 A
25 D
26 A
27 C
28 C
29 B
30 D
31 C
32 B
33 D
34 A
35 A
36 A
37 B
38 B
39 B
40 D
41 B
42 B
43 C
44 D
45 B
46 B
47 D
48 A
49 A
50 A
51 B
52 C
53 B
54 B
55 B
56 C
57 B
58 C
59 B
60 D
61 B
62 D
63 C
64 B
65 B
Chapter 8 - Issue of Debenture
MULTIPLE CHOICE QUESTIONS
[Link] Question:
1 Debentures that do not carry any charge or security on assets of the company are
known as:
a. secured debentures
b. unsecured debentures
c. convertible debentures
d. registered debentures
2 A company can issue debentures
a. for cash
[Link] a collateral security
c. for consideration other than cash
[Link] of these.
3 Which of the following is not a feature of debenture?
a. Rate of interest on the debenture is specified
b. Mode and period of repayment of principal and interest is fixed
c. Interest on debenture is an appropriation of profit
d. Debenture is generally secured by way of charge on the assets of the
company
4 Excess value of net assets over purchase consideration at the time of
Purchase of business is credited to:
a. General reserve
b. Capital reserve
c. Vendor's account
d. Goodwill account
5 Aim ltd wants to issue 10,000, 8% debentures of Rs 100 each at a discount. The
Companies Act 2013, has specified the maximum amount of discount that can be
allowed on issue of debenture is ---------
a. 80,000 b.10,000 c.25000 d. maximum discount not specified
6 Securities Premium Reserve -----------4,00,000
Preliminary expenses ----------- 50,000
Debenture issue expenses--------- 40,000
Loss due to fire 30,000
Bad debt 10,000
If Securities Premium Reserve is utilized as per Section 52(2) of the Companies Act
2013. Balance of Securities Premium Reserve will be------
a. 3,10,000 b. 3,00,000 c.2,70,000 d.3,50,000
7 If M ltd purchased machinery worth Rs 6,00,000 from N and agreed to issue 6,500,
10% debentures of Rs 100 each to vendor. The difference in the amount will be
adjusted in which account
a. Vendor b. Goodwill c. Capital Reserve d sundry assets
8 Z ltd issued 10,000, 9% Debentures of Rs 100 each at a premium of 10% payable
along with application. Subscription was received for 9,000 debentures and all the
applicants were allotted the debentures. Pass the journal entry to record the
application money received
a. Bank a/c Dr 10,00,000 and debenture application Cr 10,00,000
b. Bank a/c Dr 10,00,000 and debenture application and allotment Cr 10,00,000
KVS ZIET BHUBANESWAR 12/10/2021 Page 1
c. Bank a/c Dr 9,90,000 and debenture application and allotment Cr 9,90,000
d. Bank a/c Dr 9,90,000 and debenture application Cr 9,90,000
9 Raj ltd purchased assets of Rs 9,90,000 from Y ltd. Payment was made by issuing
8% debentures of Rs 100 at a discount of 10%. Discount on issue of debenture A/c
will be debited with
a. Rs1,10,000 b. Rs 90,000 c. Rs 99,000 d. Rs10,000
10 X ltd issued 20,000, 8%Debentures of Rs 100 each at a discount of 10%. It has
balance in Securities Premium Reserve of Rs 1,40,000 and Capital Reserve of
Rs90,000. While passing journal entry to write off Discount on Issue of Debentures,
Capital Reserve will be debited with how much amount.
a. 90,000 b 60,000 c.70,000 d.80,000
11
(A) Statement of P/L a/c and Discount on issue of debentures
(B) Discount on issue of debentures and Statement of P/L a/c
(C) Statement of P/L a/c and Debenture suspense account
(D) None
12 Interest payable on debentures is calculated at the:
(A) Issue price of debentures
(B) Nominal value of debentures
(C) Redemption value of debentures
(D) None
13 ABC Ltd has Rs 100,000, 8% debentures outstanding. Interest is paid semi-annually
on 30 September and 31 march every year. Tax deducted at source is 10%. The
th st
amount of interest paid to the debenture-holders on 31 march, 2020 will
st
(A) 3400
(B) 3500
(C) 3600
(D) None
14 On 1.4.2019, a company issues Rs 15,00,000, 9% debentures at a discount of 10%
redeemable by annual drawings of Rs 300,000 at the end of each year. On 31 march,
st
2020, security premium reserve exists at Rs 60,[Link] amount by which statement
(A) 80000
(B) 85000
(C) 88000
(D) 90000
15 A company issued 5000, 12% debentures of Rs 100 each at 10% discount,
redeemable at 10% premium. Interest on debentures are payable half-yearly on which
TDS is 10%. What will be the amount of tax deduction of a year?
(A) 3000
(B) 4000
(C) 5000
(D) 6000
16 X Ltd purchased assets worth Rs 28,80,000. It issued debentures of Rs 100 each at a
discount of 4% in full satisfaction of the purchase consideration. The number of
debentures issued to vendor is:
(A) 30000
(B) 28800
(C) 32000
(D) 3000
17 Excess value of net assets over purchase consideration at the time of purchase of
business is credited to:
(A) General reserve account
(B) Capital reserve account
(C) account
(D) Goodwill account
18 Omega Ltd purchased a business. The purchase price was paid by 20,000, 6%
debentures of Rs 100 each issued at a premium of 10%. The purchase consideration
was
(A) 20,00,000
(B) 22,00,000
(C) 24,00,000
(D) None
19 When debentures issued as collateral security is recorded in the books of accounts,
(A) Goodwill
(B) Capital reserve
(C) Debenture redemption
(D) Debenture suspense
20 When 10,000 debentures of Rs 100 each are issued as collateral security against a
(A) 10,00,000
(B) 800,000
(C) 200,000
(D) None
21. Debenture holders are:
a. Owners of the company b. Debtors of the company
c. Creditors of the company d. promotors of the company
22. Debenture represents the:
a. Long term borrowing of the company
b. The investment of equity- shareholders
c. company
d. Shorts-term borrowing of a company
23. Zero coupon bonds are issued:
a. At zero interest rate
b. With specified rate of interest
c. Without specified rate of interest
d. None of these
24. A debenture holder is entitled to;
[Link] dividend b. share in profit
