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Question : Which of the following statements is false?  

Option 1: Loss on Issue of Debentures is debited at the time of issue of debentures following the Prudence Concept of Accounting.

Option 2: Loss on Issue of Debentures is written off from Securities Premium Reserve, if it exists and thereafter from Statement of Profit and Loss.

Option 3: Loss on Issue of Debentures Account is an Expense Account and Premium on Redemption of Debentures Account is a Liability Account.

Option 4: Premium on Redemption of Debentures Account is credited at the time of payment, i.e., on redemption of debentures.


Team Careers360 9th Jan, 2024
Answer (1)
Team Careers360 14th Jan, 2024

Correct Answer: Premium on Redemption of Debentures Account is credited at the time of payment, i.e., on redemption of debentures.


Solution : Answer = Premium on Redemption of Debentures Account is credited at the time of payment, i.e., on redemption of debentures.

Discount or Loss on Issue of Debentures is a capital loss for a company, which is written off in the year it is incurred, i.e., in the year the debentures are allotted from:
(i) Securities Premium Reserve, if it exists, i.e., has a balance, and
(ii) Statement of Profit and Loss.
At the time of redemption of Debentures premium on redemption of Debentures A/c  is debited.

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