Assertion Reason MCQs of Redemption of Debenture with Answers
Assertion Reason MCQs of Redemption of Debenture with Answers
Assertion Reason Multiple Choice Questions of Redemption of Debenture with Answers
Lets Practice
Assertion (A): Debenture Redemptoin Reserve is created out of the profits of the company available for payment of dividend.
Reason (R): Debenture Redemption Reserve is created for the purpose of redemption of debentures.
In the context of above two statements, which of the above below is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is Incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is Incorrect.
Ans – b)
Assertion (A): On redemption of the debentures, Debenture Redemption Reserve proportionate to debentures redeemed is transferred to General Reserve.
Reason (R): Without General Reserve, company can not redeem the debentures.
In the context of above two statements, which of the above below is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is Incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is Incorrect.
Ans – d)
Assertion (A): Debenture Redemption Reserve is set aside out of the profits of the company available for payment of dividend.
Reason (R): Debenture Redemption Reserve is created for the purpose of redemption of debentures.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is incorrect.
Ans:- (b)
Assertion (A): Debenture Redemption Reserve is created before redemption of debentures.
Reason (R): Listed company can not redeem its debentures without creating Debenture Redemption Reserve.
In the context of above two statements, which of the above below is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is Incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is Incorrect.
Ans – d)
Assertion (A): The Debenture Redemption Reserve Account appears on the equity & liabilities side of Balance Sheet under the head ‘Reserves and Surplus’.
Reason (R): Debenture Redemption Reserve is transferred to capital reserve after redemption.
Options:
(a) Both (A) and (R) are correct an (R) is the correct reason of (A)
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A)
(c) Only (A) is correct
(d) Both (A) and (R) are wrong
Ans – (c)
Assertion (A): Debenture Redemption Reserve is shown under the head ‘Shareholders’ Funds’ and Sub-head ‘Reserves and Surplus’ in the Balance Sheet.
Reason (R): Debenture Redemption Reserve belongs to shareholders.
In the context of above two statements, which of the above below is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is Incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is Incorrect.
Ans – d)
Assertion (A): In case of an unlisted company on a stock exchange, it is necessary to create debenture redemption reserve equivalent to at least 10% of debentures outstanding before commencement of redemption.
Reason (R): Debenture Redemption Reserve must be created even if debentures are redeemed through conversion.
Options:
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is true, but (R) is false
Ans – (d)
Assertion (A): All listed as well as unlisted companies are required to invest atleast 15% of the nominal value of debentures maturing during the year.
Reason (R): Profit on sale of debenture redemption investment during the same year is a capital profit.
Options:
(a) Both (A) and (R) are correct and (R) is the correct reason of (A)
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A)
(c) Only (A) is correct
(d) Both (A) and (R) are wrong
Ans – (c)
Assertion (A): If the debentures are issued at a premium and are redeemable at a premium, the premium payable on redemption is credited to the premium on redemption of the debentures account.
Reason (R): Premium payable on redemption of debentures is a loss for the company and so it is credited to loss on issue of debentures account
Options:-
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is incorrect.
Ans:- (d)
Assertion (A): In case ₹ 20,00,000, 8% debentures are outstanding and one-fifth of these debentures are to be redeemed, transfer to DRR will be ₹ 40,000.
Reason (R): In such case, amount invested in Debenture Redemption Investment will be ₹ 60,000.
Options:
(a) (A) and (R) both are correct and (R) is correctly explains (A)
(b) Both (A) and (R) are correct but (R) does not explain (A)
(c) Both (A) and (R) are incorrect
(d) (A) is incorrect but (R) is correct
Ans – (d)
Assertion (A): If 1,000, 8% Debentures of ₹ 100 each are issued by an Unlisted Company at par and are redeemable at a 10% premium, amount transferred to DRR is equal to 10% of ₹ 110.
Reason (R): DRR amount is transferred on nominal (face) value of debentures outstanding.
Options:
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is incorrect.
Ans:- (c)
Assertion (A): Every company which is required to create Debenture Redemption Reserve (DRR) shall on or before 30th April in each year, invest or deposit as the case may be, at least 15% of the nominal value of the debentures maturing during the year ended 31ts March of the next year.
Reason (R): The amount invested or deposited shall not be used for any purpose other than redemption of debentures.
In the context of above two statements, which of the above below is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is Incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is Incorrect.
Ans – a)
Assertion (A): If 1,000, 8% Debentures of ₹ 100 each are issued by an Unlisted Company at par and are redeemable at a 10% premium, amount transferred to DRR is equal to 10% of ₹ 100.
Reason (R): Premium is payable on redemption of debentures and therefore amount will be transferred to DRR on premium payable also.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is incorrect.
Ans:- (d)
Assertion (A): If 10,000, 8% Debentures of ₹ 100 each are outstanding which were issued by an Unlisted Company at a discount of 10% and are redeemable at par, amount invested in DRI will be 15% of ₹ 90 per debenture.
Reason (R): The company had received ₹ 90 per debenture but amount invested in DRI will be 15% of ₹ 100 per debenture.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is incorrect and Reason (R) is correct.
(d) Assertion (A) is correct and Reason (R) is incorrect.
Ans:- (c)
