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CUET Accountancy 2025 PYQs3 June Shift 2. Free, no login required.

Company Accounts

past year questions, CUET Accountancy 2025 3 June Shift 2

Debentures

past year questions, Company Accounts, CUET Accountancy 2025 3 June Shift 2

Medium

common

In the case of __________ the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.

Solution

✅ Correct Option: 1

Zero Coupon Debentures are unique instruments that do not carry any explicit rate of interest. They are issued at a price lower than their nominal (face) value, known as issue at a discount.

The difference between the nominal value and the issue price represents the implicit interest for the entire duration of the debentures. This amount is spread over the life of the debentures.

Example: If a company issues zero coupon debentures with a face value of ₹1,00,000 at ₹80,000 for 5 years, the difference of ₹20,000 (₹1,00,000 - ₹80,000) represents the total interest for the 5-year period. This ₹20,000 would be written off as 'Discount on Issue of Debentures' over the 5 years.

The other options are incorrect because:

  • Secured Debentures relate to security/charge on assets, not interest treatment
  • Redeemable Debentures simply means they will be repaid; they usually carry regular interest
  • Non-convertible Debentures cannot be converted to equity but typically carry periodic interest payments

Related questions:

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: 13 May Shift 2

Match List-I with List-II.

List-IList-II
(A) Discount on reissue of Shares(I) Securities Premium Account
(B) Premium on redemption of Debentures(II) Capital Reserve Account
(C) Premium on issue of Debentures(III) Share Forfeiture Account
(D) Balance of Share Forfeiture Account(IV) Loss on Issue of Debenture Account

Choose the correct answer from the options given below:

2023: 28 May Shift 1

Company raised a loan of Rs. 5,00,000 from PNB against 5% debenture of Rs. 8,00,000 of Rs. 100 each as a collateral security. The "Debenture suspense A/c" will be debited with :

2025: 14 May Shift 2

Which situation is not true about Issue of Debentures-

2025: 14 May Shift 1

Which combination of following statements are Incorrect (False) 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) Debentures cannot be converted into shares.

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

Choose the correct answer from the options given below:

2025: 13 May Shift 2

Debentures are issued at a discount. In which of the following the difference between their nominal value and the issue price is treated as the amount of interest.

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