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easyMCQCUET Accountancy 2023 29 May Shift 22026Accountancy
1 mark

Identify those debentures out of the following options on which no explicit interest will be paid or provided by the company.

  1. A
    Debentures issued to underwriters
  2. B
    Debentures issued for cash
  3. C
    Debentures issued to vendor
  4. D
    Debentures issued as Collateral Security

Solution & Step-by-step Explanation

When a company issues debentures as Collateral Security against a primary bank loan, these debentures remain completely dormant. The bank only holds them as a secondary backup guarantee. No interest is paid on these collateral debentures. Interest is paid only on the active underlying bank loan.

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Identify those debentures out of the following options on which no explicit interest will be paid or provided by the company.
A
Debentures issued to underwriters
B
Debentures issued for cash
C
Debentures issued to vendor
D
Debentures issued as Collateral Security

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