Question

Select most appropriate alternative from those given below :

The interest on debentures is transferred to __________.
a) Debentures A/c
b) Profit of Loss A/c
c) Balance Sheet
d) Debenture holders A/c

Answer 1

The interest on debentures is transferred to Profit and Loss A/c.

Explanation: Interest on debentures is an expense for a company. Debenture-holders are the creditors of the company and are paid a fixed rate of interest every year till redemption. Therefore, the interest expense is a charge against the profits and is debited to the Profit and Loss Account.