Company AccountsQ-4 | Issue of DebenturesQuestion 5232 of 112
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Floating Charge [June 2023, 1 Mark]

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Detailed Solution & Explanation

Floating Charge: A general charge on some or all assets of an enterprise which are not attached to specific assets and are given as security against a debt.

About This Chapter: Partnership & Companies

Paper

Paper 1: Accounting

Weightage

15-20%

Key Topics

Admission, Retirement, Death, Shares, Debentures

This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Debentures

Long-term debt instruments issued by a company to the public for raising loan capital, carrying a fixed rate of interest (coupon rate) payable regardless of profit. Debenture holders are creditors, not owners, of the company.

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Reserve Capital

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Reserve Capital and Capital Reserve carry the same meaning.

As per Table F, the Minimum rate of interest that can be charged on calls- in-Arrear and that can be allowed on calls-in-advance are 10% p.m. and 12% p.m. respectively.

Re-issue of forfeited shares is allotment of shares but not a sale. [May 2018, 2 Marks]

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