Balance of Debenture Redemption Reserve A/c after the redemption of debentures is credited to :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → General Reserve Account
The Debenture Redemption Reserve is kept out of profits only while the debentures are outstanding. Once the debentures are redeemed, the reserve is no longer needed and its balance is transferred to General Reserve, a free reserve.
Option (1) Securities Premium Account — Incorrect. Securities premium arises only from issuing securities above face value.
Option (2) Capital Reserve Account — Incorrect. Capital reserve holds capital profits; DRR was made out of revenue profits.
Option (3) Statement of profit and Loss account — Incorrect. The balance is not taken back to the Statement of Profit and Loss; it stays as a reserve.
NCERT (2026-27 edition):
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