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Published on: 25/10/2025
Download CBSE Class 12th Standard CBSE Accountancy question papers, sample papers, important questions, and previous year solved papers in PDF format. Get free study materials, NCERT solutions, and exam preparation resources for Class 12th Standard CBSE Accountancy
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1.
Ashoka Ltd. had Rs. 5, 00,000 12% debentures outstanding as on 1st Jan, 2003. During the year company took a loan of Rs. 3, 00,000 from Bank of Punjab for which the company placed with the bank debentures of Rs. 3, 60,000 as collateral security.
Pass journal entries and also show how the debentures and bank loan will appear in the balance sheet.
2.
On 31st March, 2012, Warren Ltd had following balances in its books.
| 9% debentures | Rs 6,00,000 |
| Debenture redemption reserve | Rs 50,000 |
On that date, the company decided to transfer Rs 1,00,000 to debenture redemption reserve and redeemed debentures of Rs 3,00,000.
Pass necessary journal entries in the books of the company. Also identify the value shown by the company in transferring requisite amount to DRR.
3.
Debentures issued at Rs 100 and are redeemable at a discount. In the process, the company stands to gain Rs 5 on redemption. What entry should be recorded by the company?
4.
State Bank of india issued 2,00,000, 6% Debentures of RS.50 each at a premium of 8% on June 30,2012 redeemable on June 30,2015. The issue was fully subscribed. Record necessary entries for issue and redemption of debentures.
5.
Mention any one difference between premium on issue of debentures and premium on redemption of debentures
6.
When is Debenture Rememption Reserve Account transferred ?
7.
State the provisions regarding Debenture Redemption Reserve as per the Companies Act, 2013.
8.
What is meant by debentures redemption reserve ?
9.
Enumerate various methods of redemption of debentures
10.
What is meant by redemption of debentures ?
11.
Alfa Ltd. issued 10,000,9% debentures of Rs.100 each. Pass the necessary journal entries for issuing of debentures in the following cases:(i) When debentures are issued at par and redeemable at par.
(ii) When the debentures are issued at par and redeemable at premium of 10%.
(iii) When debentures are issued at a premium of 25% to the vendors for the purchase of machinery worth Rs.12,50,000.
(iv) When debentures are issued at a premium of Rs.250 each and are redeemed at par.
12.
Deepak Ltd. Purchased furniture Rs.2,20,000 from M/s Furniture Mart. 50% of the amount was paid to Furniture Mart by accepting a bill of exchange and for the balance the company issued 9% debentures of Rs.100 each at a premium of 10% in favour of Furniture Mart.
Pass necessary journal entries in the books of Deepak Ltd. for the above transactions.
13.
Pass necessary journal entries for the issue of debentures in the following cases:
(i) Rs.50,000, 8% debentures of Rs.100 each issued at par redeemable at 10% Premium.
(ii) Rs.60,000, 8% debentures of Rs.100 each issued at a Premium of 10%, redeemable at par.
14.
Pass the necessary journal entry when 10,000 debenture of Rs.100 each are issued as collateral security against a Bank Loan at Rs.8,00,000.
15.
Give the meaning of issue of debentures as a collateral security.
16.
'Ananya Ltd' had an authorised capital of Rs 10,00,00,000 divided into 10,00,000 equity shares of Rs 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March, 2007 was Rs 30. The management decided to export its products to African countries. To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors
(i) Issue 47,500 equity shares at a premium of Rs 100 per share.
(ii) Obtain a long-term loan from bank which was available at 12% per annum.
(iii) Issue 9% debentures at a discount of 5%.
After evaluating these alternatives, the company decided to issue 1,00,000, 9%debentures on 1st April, 2008. The face value of each debenture was ( 100. These debentures were redeemable in four installmentsstarting from the-end of third year, which was as follows
| Year | III | IV | V | VI |
|---|---|---|---|---|
| Amt(Rs.) | 10,00,000 | 20,00,000 | 30,000 | 40,00,000 |
Prepare 9% debentures account from 1st April, 2008 till all the debentures were redeemed.
17.
On 1st January, 2011, a Public Limited Company issued 15,000, 10% debentures of Rs.100 each at par which were repayable at a premium of 15% on 31st December, 2015. On the date of maturity, the company decided to redeem the above mentioned 10% debentures as per the terms of issue, out of profits. Surplus, i.e. balance in statement of profit and loss shows a credit balance of Rs 20,00,000 on this date. The offer was accepted by all the debenture holders and all the debentures were redeemed.
Pass necessary journal entries in the books of the company only for the redemption of debentures.
18.
Arihant Ltd issued 1,00,000, 10% debentures of Rs 10 each on 1st April, 2014 redeemable at par on 30th June, 2015. The company received applications for 1,10,000 debentures and the allotment was made to all the applicants on pro-rata basis. The debentures were redeemed on due date. Assume that required investments were made on 15th April of the financial year in which redemption is due.
Pass necessary journal entries regarding issue and redemption of debentures, DRRand investment. Assume that interest was payable on debentures on 31st March every year (Ignore TDS)
19.
Discount or loss on issue of debentures to be written off within 12 months of the date of Balance Sheet is shown as
Other current assets
Other non current assets
Other long term liabilities
Other current liabilities
20.
Debenture interest is paid
At a pre-determined rate
At variable rate
At a rate based on net profit of the company
At a rate as determined by the company from time to time
21.
Premium on redemption of debentures is in the nature of
Personal account
Real account
Nominal account
None of these
22.
Debenture holders are
Owners of the company
Creditors of the company
Vendors of the company
Customers of the company
23.
When debentures are issued as secondary securities it is called
Issue for consideration other than cash
Issue as collateral securities
Issued at a discount
Issued at premium
1.
| Date | Particulars | L.F | Debit Amount (Rs.) |
Credit Amount (Rs.) |
|
|---|---|---|---|---|---|
| Bank a/c | Dr. | 3,00,000 | |||
| To Bank loan a/c | 3,00,000 | ||||
| (Being loan taken from bank) | |||||
| Debenture suspense a/c | Dr. | 3,60,000 | |||
|
To 12 % Debenture a/c |
3,60,000 | ||||
| (Being Debentures issued as collateral security ) | |||||
2.
DRR = Rs 1 ,00,000; Debenture redemption investment = Rs 45,000
3.
Prudence concept of accounting requires that gain should not be recognised unless realised. Discount on redemption of debentures will be realised in the year of redemption. Hence, it should not be recorded in the books of accounts.
4.
Securities Premium Reserve RS.8,00,000; Payment to Debentureholders RS.1,00,00,000.
[Hint : No debenture redemption reserve is to be created because banking companies are exempted.
5.
Premium on issue of debentures is a capital profit to a company; whereas premium on redemption of debentures is a capital loss to a company.
6.
When all the debentures are redeemed, the Debenture Redemption Reserve Account is closed by transferring it to General Reserve Account.
7.
As per Section 71 of the Companies Act,2013, a company shall create Debenture Redemption Reserve equivalent to at least 25 % of the amount of debentures issued before starting the redemption of debentures.
8.
Debenture Redemption Reserve is a specific reverse retained out of profits for the purpose of redeeming debentures.
9.
(i) By paying after fixed period
(ii) By annual drawings
(iii) By purchase of own debentures from the open market.
10.
Redemption of debentures mean repayment of the amount of debentures to debentureholders
11.
(i) Dr.Bank A/c; Cr.Debenture Application and Allotment A/c by Rs.10,00,000; Dr.Debenture Application and Allotment A/c; Cr.9% Debentures A/c by Rs.10,00,000.
(ii) Dr.Bank A/c; Cr.Debenture Application and Allotment A/c by Rs.10,00,000; Dr.Debenture Application and Allotment A/c Rs.10,00,000 and Loss on Issue of Debentures A/c Rs.1,00,000; Cr.9% Debentures A/c by Rs.10,00,000 and Premium on Redemption of Debentures A/c Rs.1,00,000.
(iii) Dr.Machinery A/c; Cr. Vendor A/c by Rs.12,50,000; Dr.Vendor A/c Rs.12,50,000; Cr.9% Debentures A/c Rs.10,00,000 and Sacurities Premium Reserve Rs.2,50,000.
(iv)Dr.Bank A/c; Cr.Debenture Application and Allotment A/c by Rs.35,00,000; Dr.Debenture Application and Allotment A/c Rs.35,00,000; Cr.9% Debentures A/c by Rs.10,00,000 and Securities Premium Reserve A/c Rs.25,00,000.
12.
(i) Dr.Furniture, Cr.M/s Furniture Mart by Rs.2,20,000.
(ii) Dr.M/s Furniture Mart, Cr.B/P A/c by Rs.1,10,000
(iii) Dr.M/s Furniture Mart Rs.1,10,000; Cr.9% Debentures Rs.1,00,000 and Securities Premium Reserve Rs.10,000. (No. of Debentures issued 1,000, i.e., Rs.\(1,10,000\div 110\) ).
13.
(i) (a) Dr.Bank A/c, Cr.Debenture Application and Allotment A/c by Rs.50,000
(b) Dr.Debenture Application and Allotment A/c Rs.50,000 and Loss on Issue of Debentures A/c Rs.5,000; Cr.8% Debentures A/c Rs.50,000 and Premium on Redemption of Debentures A/c Rs.5,000.
(ii) (a) Dr.Bank A/c, Cr.Debenture Application and Allotment A/c by Rs.66,000
(b) Dr.Debenture Application and Allotment A/c Rs.66,000, Cr.8% Debentures A/c Rs.60,000 and Securities premium Reserve, Rs.6,000.
14.
( )
Irredeemable or perpetual debentures are those that are not repayable during the lifetime of the company. These debentures are repayable only at the time of winding up of the company.
15.
( )
When a company takes a loan, the company have to issue debentures as subsidiary secondary security in addition to the principal security, it is called as issue of debentures for collateral security.
16.
Dr 9% Debentures Account Cr
| Date | Particulars | Amt(Rs) | Date | Particulars | Amt(Rs) |
|---|---|---|---|---|---|
| 2009 | 2008 | ||||
| Mar31 |
To Balance c/d |
1,00,00,000 |
Apr 1 |
By Debenture Application and Allotment A/c |
95,00,000 |
| Apr 1 |
By Discount on Issue of Debentures A/c |
5,00,000 |
|||
| 1,00,00,000 | 1,00,00,000 | ||||
| 2010 | 2009 | ||||
| Mar31 | To Balance c/d | 1,00,00,000 | Apr 1 | By Balance b/d | 1,00,00,000 |
| 1,00,00,000 | 1,00,00,000 | ||||
| 2011 | 2010 | ||||
| Mar31 | To Bank A/c | 10,00,000 | Apr 1 | By Balance b/d | 1,00,00,000 |
| Mar31 | To Balance c/d | 90,00,000 | |||
| 1,00,00,000 | 1,00,00,000 | ||||
| 2012 | 2011 | ||||
| Mar31 | To Bank A/c | 20,00,000 | Apr 1 | By Balance b/d | 90,00,000 |
| Mar31 | To Balance c/d | 40,00,000 | |||
| 70,00,000 | 70,00,000 | ||||
| 2014 | 2013 | ||||
| Mar31 | To Bank A/c | 40,00,000 | Apr 1 | By Balance b/d | 40,00,000 |
| 40,00,000 | 40,00,000 |
17.
Journal
| Date | Particular | LF | Amt(Dr) | Amt(Cr) | |
|---|---|---|---|---|---|
| 2015 Mar31 |
Surplus, i.e. Balance in Statement of Profit and Loss To Debenture Redemption Reserve A/c (Begin the amount transferred to DRR out of profits) |
Dr |
15,00,000 |
15,00,000 |
|
| Apr30 |
Debenture Redemption Investment A/c To Bank A/c (Being amount equal to 15% of the value of debentures to be redeemed invested) |
Dr |
2,25,000 |
2,25,000 | |
| Dec31 |
Bank A/c To Debenture Redemption Investment A/c (Being the investment encashed) |
Dr |
2,25,000 |
2,25,000 | |
| 10% Debentures A/c Premium on Redemption of Debentures A/c To debentureholders' A/c |
Dr |
15,00,000 2,25,000 |
17,25,000 |
||
| Debentureholders' A/c To Bank A/c (Being 15,000 debentures are redeemed and paid) |
Dr |
17,25,000 |
17,25,000 | ||
| Debenture Redemption Reserve A/c To General Reserve A/c (Being DRR transferred to general reserve) |
Dr |
15,00,000 |
15,00,000 |
||
18.
JOURNAL
| Date | Particulars | LF | Amt(Dr) | Amt(Cr) | |
|---|---|---|---|---|---|
| 2014 Apr1 |
Bank A/c To Debenture Application and Allotment A/c (Being the receipt of application money) |
Dr |
11,00,000 |
11,00,000 |
|
| Apr1 |
Debenture Application and Allotment A/c To 10% Debentures A/c To Bank A/c (Being the debentures allotted and debenture application money adjusted) |
Dr |
11,00,000 |
10,00,000 1,00,000 |
|
| 2015 Mar31 |
Surplus, i.e. Balance in Statement of Profit and Loss To Debenture Redemption Reserve A/c (Being the DRR created of amount equal to 25% of the value of debentures) |
Dr |
2,50,000 |
2,50,000 |
|
| Mar31 |
Interest on Debentures A/c To Debentureholders' A/c (Being the interest due, i.e.( Rs 10,00,000 x 10/100) |
Dr |
1,00,000 |
1,00,000 |
|
| Mar31 |
Debentureholders' A/c To Bank A/c (Being the payment of interest) |
Dr |
1,00,000 |
1,00,000 | |
| Apr15 |
Debenture Redemption Investment A/c To Bank A/c (Being the investment made in government securities of the amount equal to 15% of the value of debentures) |
Dr |
1,50,000 |
1,50,000 |
|
| Jun30 |
Interest on Debentures A/c To Debentureholders' A/c (Being the interest due for three months, i.e. 10,00,000 x 10/100 x 3/12) |
Dr |
25,000 |
25,000 |
|
| Jun30 |
Bank A/c To Debenture Redemption Investment A/c (Being the investments encashed on redemption of debentures) |
Dr |
1,50,000 |
1,50,000 |
|
| Jun30 |
10% Debentures A/c To Debentureholders' A/c (Being the payment on redemption of debentures due to debentureholders) |
Dr |
10,00,000 |
10,00,000 |
|
| Jun30 |
Debentureholders' A/c To Bank A/c (Being the payment due to debentureholders discharged including interest) |
Dr |
10,25,000 |
10,25,000 |
|
19.
(c)
Other long term liabilities
20.
(a)
At a pre-determined rate
21.
(c)
Nominal account
22.
(b)
Creditors of the company
23.
(b)
Issue as collateral securities
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