The correct answer is option 2- Interest on debenture is appropriation of profits.
- The issue price and redemption value of debentures can differ- This is true. The issue price can be par, premium, discount and redemption can be at par and premium.
- Interest on debenture is appropriation of profit- This is not true. Interest on debenture is a charge against 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.
- It is common to prefix debentures with the agreed interest rate- This is true. Prefixed interest is given to debenture holders. Interest is provided at the rate of fixed rate.
- A debenture is a kind of public borrowing- This is true. The finances raised through debentures are also known as long-term debt.
|
