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CUET Accountancy 2025 PYQs30 May Shift 2. Free, no login required.

Company Accounts

past year questions, CUET Accountancy 2025 30 May Shift 2

Debentures

past year questions, Company Accounts, CUET Accountancy 2025 30 May Shift 2

Medium

common

A company has issued 10% Debentures of Face Value of Rs. 5,00,000 as Collateral Security against Rs. 6,00,000, 12% Bank Loan. What amount of total interest will be paid by company for the whole year:-

Solution

✅ Correct Option: 3

When debentures are issued as collateral security, they serve only as a backup guarantee to the lender. The company does not receive any funds against these debentures, and therefore, no interest is paid on them unless there is a default on the primary loan.

In this case:

  • Primary borrowing: Bank Loan of Rs. 6,00,000 at 12%
  • Collateral Security: 10% Debentures of Rs. 5,00,000 (no interest paid on these)

Calculation of Total Interest:

Interest on Bank Loan = Rs. 6,00,000 × 12100\frac{12}{100} = Rs. 72,000

Interest on Collateral Debentures = Nil (not an active liability)

Total Interest for the year = Rs. 72,000

The company only pays interest on the actual bank loan taken, not on the debentures kept as security. The 10% debentures will only become active if the company defaults on the bank loan and the bank invokes the collateral security.

Correct Option: 3 (Rs. 72,000)

Related questions:

2026: 24 May Shift 1

Depending upon the terms and conditions of issue and redemption of debentures, which of the following situation is not found in practice?

2025: 27 May Shift 1

Select the pair which is true about debentures-

(A) Debenture is a part of owned capital.

(B) The payment of interest on debentures is a charge on the profits of the company.

(C) The debentures cannot be issued at a discount of more than 10% of the face value.

(D) Redeemable debentures are those debentures, which are payable on the expiry of the specific period.

Choose the correct answer from the options given below:

  1. (B) and (D) only
  2. (A) and (D) only
  3. (C) and (D) only
  4. (A) and (B) only

2025: 15 May Shift 1

G.S. Rai company ltd. purchased assets of the book value of Rs. 98,000 from another firm. It was agreed that purchase consideration be paid by issuing 11% debentures of Rs. 100 each. Assume debentures have been issued at discount of 20%

Identify the number of debentures issued by the company to the vendor

2026: 20 May Shift 1

In case debentures were issued as collateral security for taking loan from ABC Bank. Choose the correct journal entry for cancellation of debentures as collateral security on repayment of bank loan.

2025: 2 June Shift 2

Discount on issue of 8% debentures is shown in the balance sheet as

2025: 16 May Shift 1

From the point of view of Tenure, debentures can be of following types:

(A) Reedemable Debentures

(B) Non-Convertible Debentures

(C) Perpetual Debentures

(D) Registered Debentures

Choose the correct answer from the options given below:

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