Read the following passage and answer question from:
Azad Limited having a nominal Capital of ₹3,00,000 divided into shares of ₹10 each offered for public subscription of 20,000 shares payable as ₹2 on application, ₹3 on allotment and balance in two calls of ₹2.50 each. Application were received for 24,000 shares by the company. All the applicants were allotted shares on pro-rata and balance in excess of application was adjusted towards allotment and balance, if any is to be returned.
Azad Limited did not make calls, as it failed to receive allotment money from those shareholder's who had applied for 4800 shares.
Azad Limited also purchased a Machine of ₹25,00,000 at ₹24,00,000 from Hari Limited and issued 7% Debentures of ₹100 each at a discount of 20% as purchase consideration. These debentures were to be redeemed after 5 years at a premium of 10%.
Identify the source(s) of finance that Azad Limited had used to raise funds:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Shares
Azad Limited raised money only through the public issue of 20,000 shares. The 7% debentures were not sold for cash; they were handed to Hari Limited as purchase consideration for the machine, so they brought in no funds.
Option (2) Debentures — Incorrect. The debentures were issued for consideration other than cash.
Option (3) Shares as well as Debentures — Incorrect. Only the shares raised money.
Option (4) Machine — Incorrect. The machine is an asset acquired, not a source of finance.
NCERT (2026-27 edition): |