Accountancy Part AIssue and Redemption of Debentures

Debenture suspense is shown in the balance sheet as:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Deduction from debenture

Debentures issued as collateral security for a loan are recorded by debiting Debenture Suspense Account. No money is raised on them, so in the notes to long-term borrowings the suspense account is deducted from the debentures and they add nothing to the liabilities.

NCERT (2026-27 edition):
Issue of Debentures as a Collateral Security – “… Debenture Suspense account will appear as a deduction from the debentures in notes to accounts of long-term borrowings.”