Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Issue and Redemption of Debentures

Question:

Debentures of the company are :

Options:

Written document

Debt

Issued under common seal

All of these

Correct Answer:

All of these

Explanation:

The correct answer is option 4- All of these.

All options are related to debentures so the correct answer is option 4 i.e. all of these.

The funds raised by the issue of shares are seldom adequate to meet the long term financial needs of a company. Hence, most companies turn to raising long-term funds also through debentures which are issued either through the route of private placement or by offering the same to the public. The finances raised through debentures are also known as long-term debt. The word ‘debenture’ has been derived from a Latin word ‘debere’ which means to borrow. Debenture is a written instrument acknowledging a debt under the common seal of the company. It contains a contract for repayment of principal after a specified period or at intervals or at the option of the company and for payment of interest at a fixed rate payable usually either half-yearly or yearly on fixed dates.