Question : Choose which of the following statements is true?
Option 1: If a company sets aside profit to Debentures Redemption Reserve, it means redemption is not out of capital alone.
Option 2: If a company sets aside profit equivalent to nominal (face) value of outstanding debentures to Debentures Redemption Reserve, it means redemption is out of profits.
Option 3: Both 1 and 2
Option 4: None of the above
Correct Answer: Both 1 and 2
Solution : Answer = Both 1 and 2
Setting aside the profit for Debentures Redemption Reserve indicates a provision for future debenture redemption. If it's equivalent to the nominal value of outstanding debentures, it implies redemption from profits. If not, it suggests redemption from a combination of profits and other sources, like capital. Hence, the correct option is 3.
Question : Puran Store Ltd., an Unlisted Company, is to redeem 5000,8% Debentures of Rs. 100 each on 30th June 2020. It has a balance of Rs. 10,000 in Debentures Redemption Reserve. It decides to set aside the amount to Debentures Redemption Reserve on 31st March 2020 on which date it has
following Reserves and Surplus: Rs. Securities Premium Reserve 25,000 Capital reserve Rs 20,000 General Reserve 30,000; and Surplus, i.e., Balance in Statement of Profit and Loss 30,000 Balance Rs. 40,000 can be set aside to Debentures Redemption Reserve from:
Option 1: Capital Reserve and General Reserve
Option 2: Capital Reserve and Securities Premium Reserve
Option 3: General Reserve and Surplus, i.e., Balance in Statement of Profit and Loss
Option 4: Securities Premium Reserve and Surplus, i.e., Balance in Statement of Profit and Loss
Question : On 1st Nov. 2018, VIVO lLtd. issued 40,000, 10% Debentures of Rs.100 each at a discount of 5%, redeemable at par after four years. The debentures were fully subscribed. It has a balance of Rs.80,000 in Capital Reserve and Rs.1,50,000 in Securities Premium Reserve which the company decided to use for writing off the discount on issue of debentures.
Question:- Statement of profit and loss account will be debited by ________.
Option 1: Rs. 1,50,000
Option 2: Rs. 2,00,000
Option 3: Rs. 1,20,000
Question : Authorised share capital is also known as:
Option 1: Called up Capital
Option 2: Issued Capital
Option 3: Reserve Capital
Option 4: Nominal Capital
Question : Pilot Pens Ltd. issued 5,000, 6% Debentures of Rs. 100 each at a discount of 20%. It had balance in Securities Premium Reserve of Rs. 60,000 and Rs. 10,000 in Surplus, i.e., Balance in Statement of Profit and Loss. Profit for the year before writing off the balance of Discount on the Issue of Debentures is Rs.20,000. Balance shown in the statement of profit and loss will be
Option 1: Rs 1,00,000
Option 2: Rs 10,000
Option 3: Rs 20,000
Option 4: Rs 30,000
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