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Home Questions DRU3PRKWKH
Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  The Bank account is debited when the money is received for debentures by a company.
Reason (R):  Bank being a real account needs to be debited when something comes in.

Options:
Both (A) and (R) are true, but (R) is the correct explanation of (A).

 Both (A) and (R) are true, but (R) is not the correct explanation of (A).

(A) is true, but (R) is false.

 (A) is true, but (R) is false.

Correct Answer:
Both (A) and (R) are true, but (R) is the correct explanation of (A).
Explanation:

On receipt of the application money:
Bank A/c Dr.
     To Debenture Application A/c
* Specifically, with the rule “debit what comes in and credit what goes out.” With a real account, when something comes into your business (e.g., an asset), debit the account. When something goes out of your business, credit the account.

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