Which A/c is credited for the transfer of interest on Debenture Redem…

The correct answer is Option (1) → Debenture Redemption Fund A/c

Under the sinking fund (Debenture Redemption Fund) method, the interest earned on the fund’s investments is not treated as income of the year; it is added to the fund itself. The interest is first received in the bank and credited to an Interest on Debenture Redemption Fund Investment Account, and that account is then closed by transfer to the credit of the Debenture Redemption Fund Account.

Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), but it is still in the CUET 2026 syllabus, so do not skip it.