Question : Which of the following statements is true?

Option 1: Loans taken are secured by mortgage of the assets purchased is known as primary or principal security.

Option 2: Security given in addition to the primary or principal security is termed or known as Collateral Security. 

Option 3: Collateral security is realised by the lender only if the due amount (loan plus interest) cannot be recovered by realising the primary or principal security.

Option 4: All of the above 

Question : Which of the following statements is false?

Option 1: Debenture is debt of the company. Therefore, a debenture holder is a lender.

Option 2: Debenture holder gets interest at the stated rate whether the company earns profit or not.

Option 3: Debentures cannot be issued at discount.

Option 4: Debentures can be converted into shares.

Question : When the Company decided not to record the issue of Debentures as Collateral Security. Which of the following accounts will be credited? 

Option 1: % debentures 

Option 2: No entry required 

Option 3:  Capital reserve 

Option 4: Debenture suspense account

Question : When the Company decided to record the issue of Debentures as Collateral Security: Which of the following accounts should be debited?

Option 1: % Debenture account 

Option 2: Debentures suspense account 

Option 3: Bank loan account

Option 4: No entry required 

Question : Which of the following statements is true?

Option 1: Collateral security means secondary security in addition to principal security. 

Option 2: The bank or the other persons to whom such debentures are issued as collateral security will not be entitled to any interest on these debentures. 

Option 3: Bank are entitled to get interest on the original loan advanced by them.

Option 4: All of the above