There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): A company can issue debentures for raising long-term borrowings.
Reason (R): The power to issue debentures must be mentioned in articles of association.
Answer & explanation
Correct answer: option 3
Most companies turn to raising long-term funds also through debentures which are issued either through the route of private placement or by offering the same to the public. The finances raised through debentures are also known as long-term debt. It is mentioned in the Memorandum of Association of the company.