Question : Which of the following statements is true?

Option 1: If the amount of interest accrued and due is not paid, it is known as Interest Accrued and Due or Interest Outstanding

Option 2: If the date of payment of interest and accounting date are different, Interest Accrued and Not Due Account is credited at the end of the year to maintain accounting records on accrual basis
 

Option 3: Interest Accrued or Outstanding (whether due or not) on Debentures is shown under the main head 'Current Liabilities' and sub-head 'Other Current Liabilities'

Option 4: All  of the above 


Team Careers360 13th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: All  of the above


Solution : Answer = All  of the above

1. Interest on debentures is a Charge against profit and is payable whether the company earns a profit or incurs a loss.  Interest on debentures is calculated at a fixed rate of interest.
2. Interest is not payable on debentures issued as collateral security.
Debentures' Interest Account is transferred to the Statement of Profit and Loss Account.
3. If the amount of interest accrued and due is not paid, it is known as Interest Accrued and Due. If the date of payment of interest and accounting date is different, the Interest Accrued and Not Due Account is credited at the end of the year to maintain accounting records on an accrual basis.
Hence, the correct option is 4.

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