Target Exam

CUET

Subject

-- Accountancy Part A

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):  Debenture holders do not enjoy any voting rights.
Reason (R):  A debenture holder  lends money and become an owner of the company with the purchase of debentures.

Options:

Both (A) and (R) are true, and (R) is the correct explanation of (A).

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

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

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

Correct Answer:

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

Explanation:

The correct answer is option 4- (A) is true, but (R) is false.

Assertion (A):
  Debenture holders do not enjoy any voting rights. This is true. Shareholders enjoy voting rights whereas debentureholders do not normally enjoy any voting right

Reason (R):  A debenture holder  lends money and become an owner of the company with the purchase of debentures. This is false as Debenture holders are only the creditors of the company as debentures are part of the borrowed capital of the company. They do not have any voting rights and cannot participate in the company's affairs.