Important Questions for Redemption of Debentures Chapter 10

Important Questions with Answers for CBSE Class 12 Accountancy Chapter 10- Redemption of Debentures which is outlined by expert Accountancy teachers from the latest version of CBSE (NCERT) books.

CBSE Class 12 Accountancy Chapter – 10 Important Questions

Question 1

Provide the meaning of Redemption of Debentures.


Redemption of Debentures means, discharging the liability on a/c of the debentures issued by an enterprise executing the repayment to the debenture holders.

Question 2

Premium payable on redemption of debentures is in the nature of,

(a) Liability a/c

(b) Asset a/c

(c) Expense a/c

(d) None of these


(a) Liability A/c

Question 3

What are the different ways of redeeming the debentures?


Following are four ways of redeeming the debentures:

  1. Payment in Lump Sum
  2. Payment in Instalments
  3. By conversion into shares or as new debentures
  4. By purchasing of debentures in open market

Question 4

Expand DRI.


DRI refers to Debentures Redemption Investment. It is the amount of debenture redemption reserve that is invested in the form of securities. The amount invested should be 15% of the nominal value of debentures that needs to be redeemed during the fiscal year.

Also Check: TS Grewal Solutions for Redemption of Debentures

Question 5

Explain DRR.


DRR refers to Debentures Redemption Reserve, It is a fund that is maintained by the company which issues debentures. Having a DRR is assurance of funds availability in order to meet obligations of debenture owners. It is helpful in minimising the risk of defaulting in payment of debentures.

Question 6

The provisions of the Companies Act, 2013 in respect of redemption of debentures are to protect the interest of,

(a) Debenture holders

(b) Creditors

(c) Shareholders

(d) Bankers


(a) Debenture holders

Question 7

Mention three points that should be kept in mind during redemption of debenture.


Three points that should be kept in mind during redemption of debenture are:

  • Time of Redemption of Debentures
  • Amount of Redemption of Debentures
  • Sources of Redemption of Debentures

Question 8

Mention any two specified securities for DRR?


Specified securities for DRR are:

  • In the form of deposits with any Scheduled Bank, that is free from any charge
  • In the form of unencumbered securities of the Central Government or any State Government

Question 9

ABC Ltd. is to redeem 10,000, 10% debentures of ₹. 100/- each on 30th June 2017. How much amount must be transferred to DRR by it?

(a) ₹ 2,50,000/-

(b) ₹ 1,00,000/-

(c) ₹ 5,00,000/-

(d) Nil


(a) ₹ 2,50,000 ( Since DRR = 25% of Face Value of Debentures)

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Chapter wise Important Questions for CBSE Class 12 Accountancy
Chapter 1- Company Accounts Financial Statements of Not-for-Profit Organisations Chapter 2- Accounting for Partnership Firms- Fundamentals
Chapter 3- Goodwill- Nature and Valuation Chapter 4- Change in Profit – Sharing Ratio Among the Existing Partners
Chapter 5- Admission of a Partner Chapter 6- Retirement/Death of a Partner
Chapter 7- Dissolution of Partnership Firm Chapter 8- Accounting for Share Capital
Chapter 9- Issue of Debentures

1 Comment

  1. Very good and useful for students

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