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Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  Shares and debentures are not alike.
Reason (R):  Debentureholders are owners and shareholders are creditors of the company.

Options:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of the Assertion(A)

Both Assertion (A) and Reason (R) are true, but ( A ) Reason (R) is not the correct explanation of Assertion (A).

Assertion (A) is true, but Reason (R) is false.

Assertion (A) is false but Reason(R) is true

Correct Answer:

Assertion (A) is true, but Reason (R) is false.

Explanation:

A ‘share’ represents ownership of the company whereas a debenture is only acknowledgment of Debt. A share is a part of the owned capital whereas a debenture is a part of borrowed capital.

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