Suvidha Ltd. was on the verge of expansion. It was requiring ₹40 lakhs for modernisation of its Machinery. It decided to issue Rs.30 lakhs, 7% debentures to public for cash and to borrow ₹10 lakhs from SBI Bank as long term loan, with a condition from SBI to issue ₹12 lakhs. 7% debentures as a subsidiary security besides the primary security, to which the company agreed. The face value of 7% debenture was ₹100.
Under which Major head in Balance Sheet, debentures and bank loans are shown.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Non current liabilities
Debentures and long-term bank loans are repaid after more than twelve months, so in the Balance Sheet of a company they are shown under the major head “Non-current Liabilities”, inside it under the sub-head “Long-term Borrowings”.
Option (1) Current Liabilities — Incorrect. Current liabilities are amounts payable within twelve months or the operating cycle, such as trade payables and short-term borrowings.
Option (2) Long term borrowings — Incorrect. Debentures and bank loans are shown here, but it is a sub-head inside Non-current Liabilities, not a major head.
Option (4) Machinery, Plant equipment and Intangible Assets — Incorrect. These are assets; debentures and loans are liabilities on the Equity and Liabilities side.
NCERT (2026-27 edition):
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