Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:
Which of the following is not a source of finance for the redemption of debentures?
Options:
Redemption out of profits
Redemption out of capital
The proceeds from the fresh issue of shares/debentures
None of the above
Correct Answer:
None of the above
Explanation:
Redemption of Debentures is the reimbursement of the amount due to the debenture holder at its maturity. The Redemption includes a refund of the principal amount along with the amount of interest due on it. The sources of finance for the redemption of debentures are redemption out of profits, redemption out of capital and proceeds from the fresh issue of shares/debentures.