Worksheets › Class 12 › Redemption of Debentures
Class 12 · Accountancy worksheetRedemption of Debentures
CBSE Accountancy. In the NCERT book, not in the CBSE 2026–27 exam: lump sum, draw of lots, open-market purchase, conversion, DRR and DRI. Every sheet has 20 questions in three sections and an answer key, and the numbers change every time.
Sample questions
Real questions from this chapter, as the app sets them. Tap Answer to see the answer and working.
Section A · multiple choice
- 1.
A profit made on cancelling own debentures bought below their face value is transferred to:
- the Statement of Profit and Loss as revenue
- Securities Premium
- General Reserve
- Capital Reserve
Answer
(d) Capital Reserve
- 2.
What is meant by “draw of lots”?
- choosing at random which debentures are repaid in an instalment
- repaying debentures without keeping back any profit for the purpose
- specified securities or deposits bought by 30 April for the debentures maturing that year
- a company’s debentures that it has bought back from the market
Answer
(a) choosing at random which debentures are repaid in an instalment
- 3.
On redemption of debentures, what happens to loss on buying own debentures above their face value?
- credited to Securities Premium
- credited to Debentureholders A/c
- transferred to Capital Reserve
- written off to the Statement of Profit and Loss
Answer
(d) written off to the Statement of Profit and Loss
Section B · short answer
- 4.
What is meant by redemption of debentures?
Answer
Repaying the debenture holders as the terms of issue require, which discharges the company’s debt on the debentures.
- 5.
Explain each term used in redemption of debentures: (a) redemption out of capital (b) Debenture Redemption Reserve
Answer
(a) repaying debentures without keeping back any profit for the purpose (b) a reserve built out of profits so that funds are kept back for repaying debentures
Section C · long answer
- 6.
Distinguish between redemption of debentures out of capital and out of profits.
Answer
Out of capital: the company repays without keeping back any profit, so the profit available for dividend is untouched; listed companies, banks, NBFCs and housing finance companies may do this. Out of profits: profit is first moved to Debenture Redemption Reserve, which keeps funds in the business for the repayment and is moved to General Reserve once the debentures are repaid.
Fresh sheets for your child
In the app, every Redemption of Debentures sheet is new: the app remembers the questions your child has already had and leaves them out. Print the sheet as a PDF, or use notebook mode and write the answers in a notebook.
Coming soon for Android and iPhone.