Debentures Accounting Quiz

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How are debentures repayable before 12 months classified in the balance sheet and why?

Debentures repayable before 12 months are classified as short term borrowings under current liabilities in the balance sheet. This is because they are due for repayment within the next 12 months, indicating a short-term financial obligation.

Explain how debentures repayable after 12 months are classified in the balance sheet and why.

Debentures repayable after 12 months are classified as long term borrowings under non-current liabilities in the balance sheet. This is because they are not due for repayment within the next 12 months, indicating a longer-term financial obligation.

In the case of debentures repayable in 40 months, how would the current maturities of long term debt be disclosed in the balance sheet?

The current maturities of long term debt for the debentures repayable in 40 months would be disclosed in the 2020-2021 financial year under the current liabilities section of the balance sheet.

For debentures issued on 1st October 2021 with a repayment date of 30th June 2022, how would they be classified in the balance sheet?

Debentures issued on 1st October 2021 with a repayment date of 30th June 2022 would be classified as short term borrowings under current liabilities in the balance sheet.

What are the permissible uses of the Security Premium reserve in a company?

The permissible uses of the Security Premium reserve include issuing fully paid bonus shares, writing off preliminary expenses, writing off expenses of, or commission paid on debentures, providing premium payable on the redemption of redeemable preference shares or debentures, and purchasing the company's own shares.

Test your knowledge on the accounting treatment of debentures with this quiz. Learn about the disclosure of debentures in balance sheets, classification of debentures as long-term or short-term borrowings, and the handling of current maturities of long-term debt.

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