1. Debenture holders are :
   1. Owners of the Company
   2. Debtors of the Company
   3. Creditors of the Company
   4. Promoters of the Company
2. Debentures represent the :
   1. Long-term Borrowings of a Company
   2. The Investment of Equity-Shareholders
   3. Directors’ shares in a company
   4. Short-term Borrowings of a Company
3. Zero Coupon Bonds are issued :
   1. At Zero Interest Rate
   2. With Specified Rate of Interest
   3. Without Specified Rate of Interest
   4. None of These
4. Interest payable on debentures is :
   1. an appropriation of profits of the company
   2. a charge against profits of the company
   3. transferred to sinking fund investment account
   4. transferred to general reserve
5. A debenture holder is entitled to :
   1. Fixed dividend
   2. Share in profits
   3. Voting rights in the company
   4. Interest at the fixed rate
6. On liquidation of company, principal amount of debentures is returned :
   1. First of All
   2. Last of All
   3. Before Equity Capital
   4. After Equity Capital
7. Which of the following statements is false?
   1. Debenture is a form of public borrowing.
   2. It is customary to prefix debentures with the agreed rate of interest.
   3. Debenture interest is a charge against profits.
   4. The issue price and redemption value of debentures cannot differ.
8. Which of the following is not a characteristic of Bearer Debentures?
   1. They are treated as negotiable instruments.
   2. Their transfer requires a deed of transfer.
   3. They are transferable by mere delivery.
   4. The interest on it is paid to the holder irrespective of identity.
9. Which of the following statements is false?
   1. At maturity, debenture holders get back their money.
   2. Debentures can be forfeited for non-payment of call money.
   3. In company’s balance sheet, debentures are shown under the head Long term Borrowings.
   4. Interest on debentures is a charge against profits
10. Which of the following statements is false :
    1. A Company can issue redeemable debentures.
    2. A Company can issue debentures with voting rights.
    3. A Company can issue convertible debentures.
    4. A Company can buy its own debentures and shares.

MCQs Questions of Class – 12 Accountancy Chapter 8 – Issue of Debentures

Answer Key

1. (A)  2. (C)  3. (C)  4. (B)  5. (D)  6. (C)  7. (D)  8. (B)  9. (B)  10 (B)