Accounting for Debentures in Class 12
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Questions and Answers

What is the main purpose of accounting for debentures?

  • To calculate the company's total assets
  • To determine the company's market share
  • To analyze the company's cash flow
  • To accurately record the issuance and redemption of debentures (correct)
  • How are debentures different from shares?

  • Debentures provide dividends, while shares do not
  • Debentures offer voting rights, while shares do not
  • Debentures represent a company's debt, while shares represent ownership in the company (correct)
  • Debentures have no maturity date, while shares do
  • What is the impact of debenture interest on a company's profits?

  • Debenture interest has no impact on the company's profits
  • Debenture interest is recorded as a separate source of income for the company
  • Debenture interest increases the company's profits
  • Debenture interest is a charge against profits and reduces the company's taxable income (correct)
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