CUET Preparation Today
| Which of the below-mentioned statements is not true in respect of debentures? |
The issue price and redemption value of debentures can differ Interest on debenture is appropriation of profits It is common to prefix debentures with the agreed interest rate A debenture is a kind of public borrowing |
| Interest on debenture is appropriation of profits |
| Interest on debentures is indeed a charge against a company's profits. When a company issues debentures, it agrees to pay a fixed interest rate to the debenture holders. This interest payment is considered a cost or expense for the company, and it is deducted from the company's profits before calculating its net income. Debenture interest is a contractual obligation that the company must fulfill, and it represents the cost of borrowing funds from debenture holders. |
