Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

Identify those debentures on which no interest will be paid/provided.

Options:

Debentures issued to underwriters

Debentures issued for cash

Debentures issued to vendor

Debentures issued as collateral security

Correct Answer:

Debentures issued as collateral security

Explanation:

The debentures on which no interest will be paid are Debentures issued as collateral security This is because the debentures are being used as security for a loan, and the interest on the loan is typically paid by the borrower, not the lender. The company on other debentures like issued to underwriters, debentures issued for cash, and debentures issued to vendors will typically pay interest to the debenture holders.