Question

Which of the following is false with respect to debentures?

• A. They can be issued for cash
• B. They can be issued for consideration other than cash
• C. They can be issued as collateral securities
• D. They can be issued in lieu of dividends

Answer 1

The correct option is D They can be issued in lieu of dividends

Sometimes a company purchases assets from vendors and instead of making payment in cash issues debentures for consideration thereof, such issue of debenture is called as issued for consideration other than cash. e.g. Purchase of assets from the company by issuing debentures as consideration, debentures issued in lieu of dividends.