Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

How is interest on debentures treated in terms of the company's profit?

Options:

It is deducted from the company's profit

It is added to the company's profit

It has no impact on the company's profit

t is recorded separately from the company's profit

Correct Answer:

It is deducted from the company's profit

Explanation:

Interest on debentures is treated as an expense for the company, and it is deducted from the company's profit to accurately represent its financial performance and to adhere to standard accounting principles.