Which of the following is true about debentures?
(A) Debenture is a part of owned capital.
(B) The payment of interest on debentures is a charge on the profits of the company.
(C) The debentures cannot be issued at a discount of more than 10% of the face value.
(D) Redeemable debentures are those debentures which are payable on the expiry of the specific period.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (B) and (D) only
A debenture is an acknowledgement of a debt: the company borrows money and promises interest and repayment.
(A) Debenture is a part of owned capital. Incorrect. A share is part of the owned capital; a debenture is part of the borrowed capital.
(B) The payment of interest on debentures is a charge on the profits of the company. Correct. Interest is payable even when there is no profit, unlike dividend, which is an appropriation of profit.
(C) The debentures cannot be issued at a discount of more than 10% of the face value. Incorrect. There is no such 10% limit on the discount at which debentures may be issued.
(D) Redeemable debentures are those debentures which are payable on the expiry of the specific period. Correct. They are repaid on a fixed date, in a lump sum or in instalments, at par or at a premium.
NCERT (2026-27 edition):
|
