Interest on debenture is :

The correct answer is Option (2) → A charge against profit

Interest on debentures is a fixed cost of borrowed funds. It is a charge against profit and must be paid whether or not the company earns a profit.

Option (1) A direct expense — Incorrect. It is a finance cost, not a cost of producing goods.

Option (3) An appropriation of profit — Incorrect. Dividend is an appropriation; interest is charged before profit is found.

Option (4) Paid only when there is profit in the company — Incorrect. It is payable even in a year of loss.