Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

Which of the following statement is false about the debentures of the company?

Options:

Form of public borrowing

Prefix debentures with the agreed rate of interest

Interest is a charge against profits

The issue price and the redemption value cannot differ

Correct Answer:

The issue price and the redemption value cannot differ

Explanation:

Depending upon the terms and conditions of issue and redemption of debentures, the following six situations are commonly found in practice.
(i) Issued at par and redeemable at par
(ii) Issued at discount and redeemable at par
(iii) Issued at a premium and redeemable at par
(iv) Issued at par and redeemable at a premium
(v) Issued at a discount and redeemable at a premium
(vi) Issued at a premium and redeemable at a premium