When Debentures are issued as collateral security to obtain loan from a bank, identify the account that is debited for recording the entry of issue of such debentures?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Debentures suspense A/c
When debentures are issued as collateral security and the issue is recorded in the books, the entry is Debenture Suspense A/c Dr. To Debentures A/c. The suspense account is shown as a deduction from the debentures, because no money is received and no extra liability arises unless the loan is not repaid.
Option (1) Bank A/c — Incorrect. No cash is received for collateral debentures; the bank loan itself is recorded separately.
Option (2) Bank Loan A/c — Incorrect. The loan is a liability credited when the loan is received; it is not debited for the debentures.
Option (3) Debentures A/c — Incorrect. Debentures A/c is the account credited in this entry.
NCERT (2026-27 edition):
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