Company AccountsQ-3 | Redemption of DebenturesQuestion 5264 of 112
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Debenture redemption reserve account is created out of its profits which are available for distribution of dividend.

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Detailed Solution & Explanation

True: Debenture redemption reserve account is created out of its profits which are available for distribution of dividend. PRACTICAL QUESTION

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

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