Class 12 Accountancy 1 Mark Questions Chapter 7 Issue and Redemption of Debentures

Here we are providing 1 Mark Questions for Accountancy Class 12 Chapter 7 Issue and Redemption of Debentures are the best resource for students which helps in class 12 board exams.

One Mark Questions for Class 12 Accountancy Chapter 7 Issue and Redemption of Debentures

Question 1.
What is meant by ‘Issue of Debentures as Collateral Security’ ? (CBSE Outside Delhi 2019)
Answer:
Debenture issued as secondary security/additional security over and above the primary security is known as Issue of Debentures as Collateral Security.

Question 2.
State the provision of the Companies Act, 2013 for the creation of Debenture Redemption Reserve. (CBSE Outside Delhi 2019)
Answer:
Where a company has issued Debentures, it shall create a DRR equivalent to at least 25% of the nominal value of debentures outstanding for the redemption of such debentures.

Question 3.
Profit arisen on account of buying an existing business at profit is transferred to which account?
Answer:
Capital Reserve.

Question 4.
Name the debentures which continue till the continuity of the company.
Answer:
Irredeemable.

Question 5.
Name the debenture which may be converted into equity shares at specified time.
Answer:
Convertible debentures.

Question 6.
Name the debentures which have charge on the company’s assets.
Answer:
Secured debentures (also known as mortgaged debentures).

Question 7.
When a debenture is issued at a price less than its face value or nominal value, what does such difference represent?
Answer:
Discount.

Question 8.
When debentures are redeemed more than the face value of debenture, What does the difference between face value of debenture and redeemed value of debenture is called?
Answer:
Premium on redemption of debentures.

Question 9.
Name the head under which ‘discount on issue of debentures’ appears in the Balance Sheet of a company.
Answer:
Head ‘Current Assets’ and sub-head ‘Other Current Assets’.

Question 10.
What does the repayment or discharge of liability on account of debentures is called?
Answer:
Redemption of debentures.

Question 11.
Under which head is the ‘Debenture Redemption Reserve’ shown in the Balance Sheet?
Answer:
‘Reserve & Surplus’.

Question 12.
When the company issues debentures to the lenders as an additional/secondary security, in addition to other assets already pledged/ some primary security. What does such issue of debentures is called? (CBSE 2018)
Answer:
Issue of dedentures as collateral security.

Question 13.
It is a written instrument acknowledging a debt under the common seal of the company, name the term.
Answer:
Debenture.

Question 14.
State an exception to the creation of Debenture Redemption Reserve as per Companies (Share Capital and Debentures) Rules 18(7). (CBSE Sample Paper 2014 Modified)
Answer:
Banking Companies

Question 15.
Mention the type of debentures whose ownership passes on mere delivery of debenture certificates.
Answer:
Bearer debentures.

Question 16.
Can ‘Securities Premium’ be used as working capital?
Answer:
No.

Question 17.
A company purchased net assets of another company worth ₹ 20,00,000 and issued debentures worth ₹ 19,00,000. What type of profit has the buying company made?
Answer:
Capital Profit.

Question 18.
Vikas Infrastructure Ltd. has issued 50,000, 10% debentures of ₹ 100 each at par redeemable after the end of 7th year. Mention the amount by which the company should create Debenture Redemption Reserve as per Companies (Share Capital and Debentures) Rules 2014 before starting redemption of debenture. Answer with giving reason.
Answer:
₹ 12,50,000.

Question 19.
Axis Ltd. has issued 8,000, 10% debentures of₹ 100 at a premium of ₹ 5 per debenture redeemable at the end of 5 years. The company has created Debenture Redemption Reserve with ₹ 4,00,000. After 5 years, the company redeemed all the debentures ₹ Where should the company transfer the amount of Debenture Redemption Reserve?
Answer:
General Reserve.