ISC Accounts Redemption of Debentures MCQs With Solved Answer

ISC Accounts Redemption of Debentures MCQs With Solved Answer (1 to 5)

1. Sources of finance for the redemption of debentures are:

(a) Redemption of debentures out of capital.
(b) Redemption of debentures out of profit.
(c) Redemption of debentures out of capital and profit
(d) All of these

2. Repayment of the amount of debentures to debentureholders is called:

(a) Redemption of Debentures.
(b) Redemption of Shares.
(c) Issue of Debenture
(d) None of these

3. Profit and redemption of debentures is transferred to :

(a) General reserve account.
(b) Profit and loss account.
(c) Statement of P&L.
(d) Capital reserve account.

4. Methods of redemption of debentures are:

(a) Lump-sum payment at the end of fixed year
(b) Redemption of debentures in Instalments 
(c) By purchase of own debentures on the open market
(d) By conversion into shares or new debentures
(e) All of these.

5. After redemption of debentures, the balance of debenture redemption reserve (DRR) transferred to:

(a) Capital Reserve account.
(b) Statement of Profit and loss.
(c) General Reserve account.
(d) None of these.

Note: Answers are ginen below at the end.

Issue of debentures MCQs with solved Answers

ISC Accounts Redemption of Debentures MCQs With Solved Answer(6 to 10)

6. When no profits are set aside for redemption of debenture is called:

(a) Redemption out of capital.
(b) Redemption out of profit.
(c) Both (A) and (B)
(d) None of these.

7. Which of the companies are exempted from creating debentures redemption reserve by the SEBI:

(a) Debentures issued by All india Financial institution regulated by RBI.
(b) Debentures issued by Banking companies.
(c) Housing finance companies resistered with national housing bank.

(d) All of these.

8. When debentures issued at par and redeemable at 12% Premium , the premium payable is debited to  :

(a) Loss on issue of Debentures account.
(b) Profit and loss account.
(c) Premium on redemption of Debentures Account.
(d) None of these.

9. Debentures are redeemed setting aside full nominal value (Face Value) of Debentures to Debenture Redemption Reserve . It is called :

(a) Redemption out of capital.
(b) Redemption out of profit.
(c) Both (A) and (B)
(d) None of these.

10. Debentures are redeemed setting aside 10 % of  nominal value (Face Value) of Debentures to Debenture Redemption Reserve . It is called :

(a) Redemption out of capital.
(b) Redemption out of profit.
(c) Both (A) and (B)
(d) None of these.

Issue of shares MCQs with solved Answer

Note: Answers are ginen below at the end.

ISC Accounts Redemption of Debentures MCQs With Solved Answer (11 to 16)

11. Discount or Loss on Issue of Debentures is a : 

(a)  Capital Loss.
(b) Capital profit.
(c) Revenue Loss
(d) None of these.

12. TORA Ltd. is to redeem 20,000, 9% Debentures of ₹100 each at a premium of ₹ 10 out of profit.Amount that should be set aside to Debenture Redemption Reserve (DRR) is : 

(a)  ₹2,00,000
(b) ₹5,00,000
(c) ₹2,20,000
(d) ₹ 2,25,000

13. MORA Ltd. has outstanding 10,000, 8% Debentures of ₹100 each that are redeemable at premium of ₹ 20 each. Out of these, 5,000 debentures are to be redeemed on 31st December, 2020. Debenture Redemption Reserve should be : 

(a)  Rs. 2,00,000
(b) Rs. 1,00,000
(c) Rs. 50,000
(d) Rs. 1,25,000

14.RATA Ltd. has 30,000, 8% Debentures of ₹100 each due for redemption March 2021. Debenture Redemption Reserve has a balance of ₹1,90,000 March, 2020. It was decided to invest the required amount towards Debenture Redemption Investment. Investments were realised at 110 % less 0.5% brokerage and debentures were redeemed. Amount now required to be  transferred to  DRR : 

(a)  ₹3,00,000
(b) ₹1,90,000
(c) ₹ 50,000
(d) ₹1,10,000 

15. The company may purchase its own debentures in the open market with the objective of :

(a) Immediate cancellation
(b) Keeping them as investments (to be cancelled or reissued at a later date).
(c) a and b
(d) None of these

Note: Answers are ginen below at the end.

Dissolution of partnership firm MCQs With Solved Answer 12 Cbse

ISC Accounts Redemption of Debentures MCQs With Solved Answer (16 to 20)

16. XYZ Ltd. Purchased for cancellation its own 5,000, 12% Debentures of ₹100 each for ₹95 per debenture. The brokerage charges 15,000 were incurred.The amount to be transferred to Capital Reserve :

(a)  ₹25,000
(b) ₹10,000
(c) ₹40,000
(d)  None of these

17. On Ist April, 2014, a company issued 2,000, 8% Debentures of ₹100 each at a premium of ₹ 20, repayable at a premium of ₹20. The terms of issue provided for the redemption of ₹20,000 debentures every year commencing from 31st March, 2016 either by purchase from the open market or by draw of lots at the company’s option. On 31st March, 2016, the company purchased for cancellation its own debentures of the face value of ₹16,000 at ₹95 per debenture and of ₹4,000 at ₹90 per debenture.:

(a)  ₹5,200
(b) ₹ 4,000
(c) ₹ 1,200
(d)  None of these

18. XYZ Ltd.  Issued 5,000, 12% debentures of ₹100 each at a premium of 4%, redeemable at a premium of 15%. In such case : 
(A) Loss on Issue of debentures account will be debited by ₹75,000
(B) Loss on Issue of debentures account will be debited by ₹55,000
(C) Loss on Issue of debentures account  will be debited by ₹50,000
(D) Premium on Redemption of debentures account will be credited by ₹48,000

19. XYZ Ltd.  Issued 5,000, 12% debentures of ₹100 each at a premium of 4%, redeemable at a premium of 10%. In such case : 
(A) Loss on Issue of debentures account will be debited by ₹70,000
(B) Loss on Issue of debentures account will be debited by ₹30,000
(C) Loss on Issue of debentures account  will be debited by ₹40,000
(D) Premium on Redemption of debentures account will be credited by ₹50,000

20. XYZ Ltd.  Issued 5,000, 12% debentures of ₹100 each at a premium of 4%, redeemable at par. In such case : 
(A) Loss on Issue of debentures account will be debited by ₹70,000
(B) Loss on Issue of debentures account will be debited by ₹30,000
(C) Loss on Issue of debentures account  will be debited by ₹40,000
(D) None of these.

Note: Answers are ginen below at the end.

Answer – Question Number 1 To 20 

1. Answer- (d) All of these

2. Answer- (a) Redemption of Debentures.

3. Answer- (d) Capital reserve account.

4. Answer- (e) All of these.

5. Answer-(c ) General Reserve account.

6. Answer- (a) Redemption out of capital.

7. Answer- (d) All of these.

8. Answer- (a) Loss on issue of Debentures account.

9. Answer- (b) Redemption out of profit.

10. Answer-(c) Both (A) and (B)

11. Answer- (a)  Capital Loss.

12. Answer- (a)  ₹ 2,00,000

13. Answer- (b) ₹ 1,00,000

14. Answer- (d) ₹ 1,10,000

DRR- 10% of 30,00,000 = ₹3,00,000

Less- Existing Balance = ₹1,90,000

Amount now required to be  transferred to  DRR ₹1,10,000

15. Answer- (c) a and b

16. Answer-(b) ₹ 10,000

17. Answer-(a)  ₹ 5,200

18. Answer -(A) Loss on Issue of debentures account will be debited by ₹75,000.

19. Answer -(D) Premium on Redemption of debentures account will be credited by ₹50,000.

20. Answer -(D) None of these.