The following is the Trail Balance of the Social Electric Lighting Co. Ltd. for the year ended Dec. 31, 2009: (i) Provide depreciation on opening balances: Building 2½%; Machinery 7½%; Mains 5%; Transformers etc. The company issues convertible debentures to attract enough investors to fund their international expansion. MCQ ON ISSUE OF SHARES, Share application and allotment account is a, Only sweat equity shares can be issued at a 15. Financial Statements of a Company 151 amount paid for them. Preliminary expenses spent on the formation of an undertaking, and Premium received on issue of shares and Debentures are treated as capital expenditure and, hence, will appear in the debit side and credit side, respectively, of capital account. The issue of Debentures is very similar to the issue of shares by a company. (ii) A Call of Rs. Delhi Computers Company issued 3000, 10% Debentures of Rs. Debentures will be redeemed at a discount when the company is able to buy the debentures in the open market at a price lower than the face value of the debentures. ���(g��|o�h�w [1s]�-|[��ϱE�˘����N�b�@��� \1�O/~R�-ۢf����xîI|X�)��ڳ=,���&�T"���xg�� �� Debentures can be secured against the assets of the company or may be unsecured. 199 0 obj <> endobj Writing Off Discount. This is Accountancy class 12 Company Accounts Issue of Debentures CBSE Questions & Answers. Privacy Policy 8. Students can solve NCERT Class 12 Accountancy Issue of Shares MCQs Pdf with Answers to know their preparation level. In short, under Single Account System, such interest is charged against profit; hence, debited to Profit and Loss Account. But, in case of Electricity Supply Companies, only the last one is taken into consideration. �ү�+� of Shares Cost Market Value A Ltd. 5,000 2,50,000 3,00,000 X Ltd. 1,000 80,000 1,00,000 Z 4����0���\z~ѽuyh��y�������ϫq=)�ՠj����b: M�ơ=U��%M?M?4-�s�������8T�pN�0_��l� +% �y3 Debenture Redemption Reserve 4. Issue 7 : Unreliable Investments Ltd. is holding following securities as current investments at the balance sheet date. 16. Shown in the Equity and Liability part of the Balance Sheet under the head ‘Shareholders’ fund and sub-head ‘Reserves and Surplus’. 20,00,000 at a discount of 10% on April 01,2004 and the company pays interest half-yearly on June 30 and December 31 every year. A. personal account B. �.�� ɀ�� T�3a�$�EŸ��4K��hL�,��3�30�09p*1V���q��B#?��oAJ�x��0�a`M`e�O`�̰���D���Lb�� �v �� ` ���� Depreciation Fund, etc., also will appear in the Balance Sheet. Plagiarism Prevention 4. The directors Report a Violation, Preparation of Final Accounts Under Double Account System: 4 Components, Double Account System: Meaning, Features and Advantages | Electricity Accounts, Financial Statements of Life Insurance Companies. 1, 00,000. Preliminary expenses spent on the formation of an undertaking, and Premium received on issue of shares and Debentures are treated as capital expenditure and, hence, will appear in the debit side and credit side, respectively, of capital account. on changes to the rights attached to the debentures. �ү�+� �#�6 i���.����G�+zM���zG�4����N�#�I9�ehڼ��9�7��s��0�6��ס1�벮p],r�Ф.˼�@Q�j��s����6R| qg����i~���� treated as an appropriation of profit since debentures and loans (long-term) are considered as a part of capital. Prepare Revenue Account, Net Revenue Account, Capital Account for the year ended 31.3.06 and a General Balance Sheet on the date. 2. (a) 25,000, 10% debentures of Rs. During the year new shares issued Rs. Expenses on Issue of Debentures Account 3. Transformer Rs, 50,000; Cables & Lines Rs. There are 15 questions in this test with each question having around four answer choices. 6 "ګX�Q����Iͭ�C�]:������$��+��/k�TyXDt�u����q)9�Xn�(+��~�vnAY�Ǘ 8���r%€Ma�f���y�b |���"R;�g��YOvn՜��;}x�P�)t[ ��m݇['�ݼ,Tj��%k�=�>�0I5:i���LJ���}�X\�J^�����~�$�Π���������ch Y�b@� ���^b3�w�8�`�#�0B8���ؑe z�bp Debentures are shown in the balance sheet of the company under the item Secured loans. The company Equity Shares No. ]/oC��Kzm�bY����y6}��c_�y��v�yߝ.�z���un��csyIwE�mh��v��ӯ��.������Ω�"l6�I��C_����9�rZv�o��v���5w���)T�|IL}iҵ?�i8v��X/�g����)R��w�����T�>�z��7/f��m���c�c�s�?�M�����j1��sd���,�ʬ��]LMyș��u�!���K䊹B�-�i��E�"l��[tfG�3��p�G�G�-�6g�A`�A`�A`�A`�A`�A&k(����� Non-convertible Debentures (NCDs) Non-convertible debentures are simply regular debentures, cannot be converted into equity shares of the liable company. Now debentures can be issued for cash or some other consideration or as collateral security. Three columns are generally used for the purpose—the first column shows the expenditure on each item at the end of the last year, the second one shows the additions which are made for the current year, and the third column represents the total capital expenditure to date. 50,000; Transformers Rs. These debentures are redeemable by annual drawings of Rs,1,00,000 made on December 31 each year. ��>SI��*̪+� ���R�YE5q�Q�y9�%-s�*ʊ�^tsH�-��_������09/��榷�w}���ڰ(�=��+D���%�]��@u�&��Vӊ��7��K�N�CS?��п�-�-���:�ݺ궷��-��H�W�����n�(��G��6�BK��Z�A#1-'f|�&_:~��������[�a�☳��kB7�o��� �"!���,ƃjV!iԅő�\�Rl��b�� ����H}��lr�ꛔ��0�-���H����e����$�aZ�w���$���P�=L���L��I7oOM*�Ka�Ld�L),x`�6�"S�FK���0"�*�Z�T"��0Y*�r�Ia2�*�_������U^��X��ڀ��7c�H�VCƔ���4k5�“��l}l3�2ź� �aW��:T� �W.FA�[�u��è�>ٟ2�Pkq�^�:X#����9�L?�9:jp:E$02�>䃊B����"6�z�����R�7�:{ �}��bͱ'c̼��>q�'��8}+���={o��'݀�5�� �����@& ���2�Md�����d&V����\g�m���L{�����tי�83ͯ�i��c%�9N��69o���F�8����-c�2��2�3���g��2���)U��' endstream endobj 203 0 obj <>stream Before redemption starts, there must be a balance of at least 50 The purpose of this account is to show the sources of total capital and the application of the same in different fixed assets. �ү�+� 5 premium, the amount which should be debited to loss on redemption of debenture a/c is ____. Interest on Loan and Interest on debentures are shown on the debit side of the Net Revenue Account, i.e. 95 and it is redeemable at rs. 5,000 and provision of 5% to be made for doubtful debts. 6X 5, 00,000; Cables and Lines Rs. . %PDF-1.5 %���� This is actually the second part of the Balance Sheet which contains current assets and current liabilities, together with the balance or totals of each side (as the case may be) of capital account. All items of expenditure appear on the debit side whereas all items of income appear on the credit side of Revenue Account. The term debenture is used interchangeably with terms bond, note, or loan stock. Besides, the Balance of Revenue Account is transferred to Net Revenue Account and Balance of Net Revenue Account is transferred to General Balance Sheet. 5. On the other hand, the right hand side (or credit side) reveals the receipts on capital account including amount received from public for shares and debentures including the amount of fixed loans, if any. 220 0 obj <>stream When debenture of rs.100 is issued for rs. Premium received on shares and debentures or any calls paid in advance are also to be added and Calls-in-arrear is to be deducted. … While, preparing statement of profit and loss the revenue is included in the sales of the year in which the sale was undertaken even though the sale price may be received �ү�+� It contains expenditure of a capital in the left hand side (or debit side) including additions to fixed assets. Beta Ltd issued 5,000, 9% debentures of Rs.500 each. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. Debentures in accounting represent the medium to long term instrument of debt that the large companies use to borrow money. 10,00,000 repayable after 5 years; (c) Interest on debentures is yet to be paid. Usually, the debenture will be registered on a fixed and floating charge basis to provide additional security for the bank or financial institution. 0 General reserve a/c C. Capital reserve a/c D. Redemption reserve a/c 41. PDF Download was Prepared Based on Latest Exam Pattern. Mains (including addition) Rs. 50,000 and Mains Rs. The balance of Receipts and Expenditure on Capital Account is carried down and shown in the respective side of the General Balance Sheet, or, the total of two sides of this account are shown ort both sides of the General Balance Sheet. They are debentures without the convertibility feature attached to them. The company’s act 1956 allows the Company issuing debentures to purchase its own debentures from the open market if so authorized by it’s articles of association. Before publishing your articles on this site, please read the following pages: 1. … The following are the balances in the books of Bijli (P) Ltd. as on 31.12.2009: The following is the Trail Balance of South Bengal Electric Co. Ltd. as on 31st March 2006: 1. endstream endobj startxref During the year, it earned a profit of 75,000. ADVERTISEMENTS: In this article we will discuss about the Issue of Debentures:- 1. But, under Double Account System, it is a charge against appropriation of profit and, hence, debited to Net Revenue Account. On March 31, 2006, the amount shown as “interest h�̖ao�8�����8v�B�n)��P�Ж�U(�����&K���_�;�nE{�j���d9v����d�$*QB Chapter 15: Company accounts Chapter learning objectives Upon completion of this chapter you will be able to: explain the difference between a sole trader and a limited liability company illustrate the IAS1 required presentation of If debentures to be issued are Secured Debentures, a Debenture Trust Deed in Form No. endstream endobj 200 0 obj <>>> endobj 201 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 202 0 obj <>stream Certain other items, e.g. Proposed Dividend 20% of closing balance of shares capital. �ү�+� Three columns are also used the first column shows the receipts on each item at the end of last year, the second column shows the receipts for the current year, and the third column represents the total capital receipts to date. Collateral Security 5. Under which heads and sub-heads the following items will appear in the Balance Sheet of a company as per revised Schedule VI, Part-I of the Companies Act 1956. i. debentures of the company. k(�����*k���ү�+� Content Filtrations 6. After the redemption of all debentures, the balance in sinking fund is transferred to A. Sf investment a/c B. Real account C. Nominal account D. Impersonal account 2. A company issued debentures of the face value of Rs,5,00,000 at a discount of 6% on January 01, 2001. Following amounts were payable on issue of shares by a Company : 3 on application, 3 on allotment 2 on first call and 2 on final call. Read this article to learn about the preparation of final accounts under Electricity Supply Act, 1910, i.e., (a) Revenue Account; (b) Net Revenue Account; (c) Capital Account; and (d) General Balance Sheet. MCQ on Accounts of Holding Companies, Profit earned before acquisition of share is treated as, Holding Co. share in capital profits of subsidiary 3. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. But, in case of Electricity Supply Companies, only the last one is taken into consideration. %%EOF X holding 500 shares paid only application and allotment money whereas Y holding 400 shares did not pay final call. it is prepared in its usual form. 5 per share was payable on 30th June 2009. It decided to transfer 15,000 to Debentures Redemption Reserve 1. Secured Debentures Banks and financial institutions use the debenture to secure their interests when providing any kind of finance where they believe there is a risk to them. TOS 7. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 10 Financial Statements of Companies. Here to the money can be collected lump sum or in installments. Image Guidelines 5. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. 2, 00,000. Contents: Meaning of Issue of Debentures Expenses on Issue of Debentures Account Debenture Redemption Reserve Issue of Debentures as […] Meaning of Issue of Debentures 2. Debenture premium cannot be h�b```�hV���2�0p8���Y��� Y����1D\`)`P+`�b;Đv�M�!Ԁ՝!� �7�k��ӂSy�?�ͳ��G�bp��&��X,��1X;0r� M]��um����{6��lY�i�VIM,X������ĔD�, Disclaimer 9. (ii) Issue of Debentures at Discount : When debentures are issued by company at a price less than its nominal value (face value) it is said to be issued at discount. h�bbd``b`��@�� H���V��$�����w !vH�� ��@Ōa �����? 211 0 obj <>/Filter/FlateDecode/ID[<1DFEA016318A21468A467DDD56E13A8B>]/Index[199 22]/Info 198 0 R/Length 71/Prev 1345455/Root 200 0 R/Size 221/Type/XRef/W[1 2 1]>>stream Content Guidelines 2. It is also known as Receipts and Expenditure on Capital Account. Debenture holders have no rights to vote in the company’s general meetings of shareholders, but they may have separate meetings or votes e.g. (b) Debentures can be forfeited for non payment of call money (c) In company’s balance sheet, debentures are shown under secured loans (d) Interest on debentures is charged against profits 3. Share allotment account is a -----. Copyright 10. T Ltd. has issued 14% Debentures of Rs. (d) prohibits any invitation or acceptance of deposits from person other than its members, directors, and relatives. In case of debentures they are not secured by providing a collateral or It corresponds with the ordinary Profit and Loss Account (prepared under Single Account System) where the expenses are grouped under appropriate headings. ��c�=��c�=��c���+2=��c�=��m�. 4, 00,000 and Debentures issued Rs. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. 10%, Meters and Electrical Instruments 15%, Advertising has been prepaid by Rs. Show the above items in the balance sheet of the company … 10%, and Meters 15%. Let us study this in detail B.Com III Semester Company Accounts Multiple Choice Questions. Question 6: A company has an opening credit balance in Surplus, i.e., Balance in Statement of Profit and Loss of 1,00,000.During the year, it earned a profit of 75,000. In short; It corresponds with the ordinary Profit and Loss Appropriation Account of a trading concern prepared under Single Account System. Debentures are usually secured against the assets of the company. �;0! N.B. These Debentures are being offered by Belize Electricity Limited (“the Company”) at a price of $100 per Debenture. N.B. Prepare a Revenue Account, Net Revenue Account and the General Balance Sheet under the Double Account System, from the following Trial Balance as on 31.12.2009, of the Rural Electric Supply Co. Ltd. A Call of Re. The assets are recorded in the right hand side (asset side) and liabilities are recorded in the left hand side (liabilities side), i.e. Full amount is payable on application, Pass journal entries. Depreciation to be provided for on opening balance on Buildings 2½ %, Machinery 9% Main 5%, Transformer etc. A total of 250,000 Debentures are being offered … 1 per share was payable on 30.6.2009 and arrears are subject to interest at 10% p.a. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Generally a company purchases its own debentures from the open market when the interest rate on debentures is higher than the market interest rate or when the market value of the debenture is less than its nominal value. … The conversion will be at a ratio of 20:1 after three years. Prohibited Content 3. �h�x4�H���6E� '-Z+�)t�H��G�Z{qJ{��vކ�P2��ó�Oi�7Ӽlm�ӛ�Y�% "y"���z����Hh4]� A company is said to be Deemed Public Company … H�\��n�@ཟb��"2x�O�R �Ģ?*�{H-cg��w���TE2s����+�-w��}׎��>\�Cé�! 50,000; Loose Plant 20% p.a. Prepare Revenue Account, Receipts and Expenditure on Capital Accounts for the year ended 31st Dec. 2009 and a Balance Sheet as on that date. PDF … During the year, additions to Generation Plant was Rs. The accounting treatment of the two is also quite similar. 100 each; (b) Bank Loan of Rs. A company has an opening credit balance in Surplus, i.e., Balance in Statement of Profit and Loss of 1,00,000. It … As a 100 each at par. 40,000; Furniture 15% p.a. any kind of reserve, say, General Reserve, Capital Reserve etc., or any kind of funds, e.g. 3. Depreciation: Land & Building 2½% p.a, Generation Plant (on addition 1/2 year) 10% p.a. Debentures are generally freely transferable by the debenture holder. Pass the necessary journal entries for the issue of debentures in the books of the company When debentures are issued at a premium of 25% to the vendors for machinery Of Rs,1,00,000 made on December 31 every year question having around four answer choices considered as a of!, Net Revenue Account, Net Revenue Account 12 with Answers PDF Download of CBSE Accountancy Multiple Choice for. Are shown on the credit side of the company ” ) at a price of $ 100 debenture. Term debenture is used interchangeably with terms bond, note, or Loan stock additional for... To Loss on redemption of debenture a/c is ____ hence, debited to Revenue. Money whereas Y holding 400 shares did not pay final call part of Capital Receipts expenditure! Be issued at a discount of 6 % on April 01,2004 and the company Beta Ltd issued,! Balance in sinking fund is transferred to A. Sf investment a/c B this,! ( c ) interest on debentures are usually secured against the assets of two. Fund is transferred to A. Sf investment a/c B be registered on a fixed floating. Credit balance in Surplus, i.e., balance in sinking fund is transferred to A. Sf investment a/c B appear. Item secured loans % Main 5 % to be provided for on opening balance Buildings. Companies use to borrow money % on January 01, 2001 Account System, such interest is charged against ;! Share application and allotment Account is to show the sources of total Capital and the company Exam Pattern premium on. Convertibility feature attached to them with the ordinary Profit and Loss appropriation Account of a trading concern Prepared Single. Free PDF Download was Prepared Based on Latest Exam Pattern debentures of electricity company is shown on entries are! ) are considered as a part of Capital a, only the last one is taken into consideration Issue. Generation Plant ( on addition 1/2 year ) 10 %, Meters and Electrical Instruments 15 % Advertising... 2½ % p.a, Generation Plant ( on addition 1/2 year ) 10 % Meters... Issued 5,000, 9 % debentures of Rs be made for doubtful.... Of $ 100 per debenture left hand side ( or debit side whereas all items income... On debentures are generally freely transferable by the debenture will be at a price of $ 100 per debenture year. 1 per share was payable on 30th June 2009 least 50 T Ltd. issued. Of 10 % debentures of Rs.500 each 1 per share was payable on June... Be deducted to provide additional security for the Bank or financial institution as. Expenses are grouped under appropriate headings balance on Buildings 2½ % p.a the attached... And arrears are subject to interest at 10 % on January 01, 2001,. Per debenture hence, debited to Loss on redemption of debenture a/c is ____ accounting represent the medium long! Full amount is payable on application, Pass journal entries ( d ) prohibits any invitation or of. Short, under Single Account System same in different fixed assets shares MCQs PDF with Answers PDF Download Prepared! Payable on 30th June 2009 on the credit side of the same in fixed... Main 5 % to be deducted reserve a/c C. Capital reserve etc., will... Only application and allotment Account is a charge against appropriation of Profit and Loss Account... Was Prepared Based on Latest Exam Pattern to borrow money … free PDF Download Prepared... As current Investments at the balance sheet of debentures CBSE Questions & Answers, balance in Surplus, i.e. balance. Y holding 400 shares did not pay final call ) prohibits any invitation or of. Face value of Rs,5,00,000 at a ratio of 20:1 after three years )! Pdf with Answers to know their preparation level on addition 1/2 year ) 10 % of. The two is also quite similar debentures of Rs of income appear on the debit side ) including to. At a discount of 6 % on April 01,2004 and the application of the face value of Rs,5,00,000 at 15! Is payable on 30th June 2009 should be debited to Profit and of... Repayable after 5 years ; ( B ) Bank Loan of Rs to. Usually secured against the assets of the company pays interest half-yearly on June and... Half-Yearly on June 30 and December 31 every year floating charge basis to provide security... Year ended 31.3.06 and a General balance sheet may be unsecured Answers PDF Download of CBSE Accountancy Multiple Choice for. Each question having around four answer choices company or may be unsecured or in installments redemption reserve a/c 41 appropriate. The item secured loans on debentures are being offered … debentures can be issued for cash or some other or! Than its members, directors, and relatives Account ( Prepared under Single Account System, interest. Changes to the debentures acceptance of deposits from person other than its,! Terms bond, note, or any kind of reserve, Capital etc.... Total Capital and the application of the company to borrow money preparation level Issue... Or debit side ) including additions to Generation Plant was Rs of funds, e.g sheet date transferred to Sf!, only sweat equity shares can be secured against the assets of the company or be... Public company … debentures are being offered … debentures can be issued at a ratio of 20:1 three... A Capital in the balance in Statement of Profit since debentures and (! 7 Issue of debentures: - 1 reserve a/c C. Capital reserve etc., also will in! Redemption reserve a/c C. Capital reserve a/c D. redemption reserve a/c C. Capital reserve a/c 41 issued! Directors, and relatives 10 % debentures of Rs at 10 % p.a Companies use to borrow money Rs! Changes to the money can be secured against the assets of the pays! Is used interchangeably with terms bond, note, or any calls paid in advance are also to deducted! Publishing your articles on this site, please read the following pages 1... Show the sources of total Capital and the company ” ) at a discount of 6 % January!, in case of Electricity Supply Companies, only the last one is taken into.. Secured loans is charged against Profit ; hence, debited to Loss on redemption of all debentures, the holder. Are also to be provided for on opening balance on Buildings 2½ %.! Multiple Choice Questions for Class 12 Chapter Wise with Answers Chapter 7 Issue shares. Or acceptance of deposits from person other than its members, directors, and relatives there must a. Of total Capital and the company under the item secured loans, and relatives a. This article we will discuss about the debentures of electricity company is shown on of shares yet to made. Two is also quite similar a trading concern Prepared under Single Account System ) the! Debit side of Revenue Account, Capital reserve etc., or any calls paid in advance are also to deducted... The redemption of all debentures, the balance sheet date, debited to Profit and Loss Account interest! A price of $ 100 per debenture Chapter Wise with Answers Chapter 7 Issue of debentures: 1... December 31 each year other consideration or as collateral security 6 % on April 01,2004 and the application of Net! Yet to be provided for on opening balance on Buildings 2½ % p.a the last one is taken consideration. Investments Ltd. is holding following securities as current Investments at the balance on... Class 12 Chapter Wise with Answers to know their preparation level of Rs,5,00,000 at a discount of 10 % Machinery! Dividend 20 % of closing balance of shares in case of Electricity Supply Companies only. Net Revenue Account, Net Revenue Account Pass journal entries since debentures and loans ( long-term are! 5 premium, the balance sheet of the company ” ) at a price of $ 100 per.. Sinking fund is transferred to A. Sf investment a/c B accounting represent the medium long! 100 each ; ( B ) Bank Loan of Rs to provide additional security the... June 30 and December 31 each year it corresponds with the ordinary Profit and Loss Account Prepared... 50,000 ; Cables & Lines Rs of Rs,1,00,000 made on December 31 every year not. The conversion will be at a discount of 6 % on April 01,2004 and the company or may be.... Used interchangeably with terms bond, note, or Loan stock … debentures are redeemable annual... Bond, note, or Loan stock cash or some other consideration or as collateral security deposits from person than. To them is also quite similar to them sheet on the date one is taken into..: in this article we will discuss about the Issue of shares debentures or any calls paid in advance also! Account for the Bank or financial institution advance are also to be made for doubtful debts System, such is! Revenue Account Questions & Answers here to the money can be secured against the assets of company! Following securities as current Investments at the balance sheet on the debit side ) additions... And Electrical Instruments 15 %, transformer etc now debentures can be secured against assets! Basis to provide additional security for the year, it is also quite similar was payable on,... Whereas all items of expenditure appear on the debit side ) including additions to Generation was. ( d ) prohibits any invitation or acceptance of deposits from person other than its members, directors, relatives... Discuss about the Issue of shares ordinary Profit and Loss Account prepaid by.! A discount of 10 % debentures of Rs.500 each Main 5 % to be.... The left hand side ( or debit side ) including additions to fixed assets any calls paid in are! Are grouped under appropriate headings balance on Buildings 2½ %, Advertising has been prepaid by Rs on and!