Question

Which of the following statements is correct about debentures? 

(a) Interest on debentures is an appropriation of profits. 

(b) Debenture holders are the creditors of a company. 

(c) Debentures cannot be issued to vendors at discount. 

(d) Interest is paid on Debentures issued as Collateral Security

Answer 1

(b) Debenture holders are the creditors of a company. 

Debentures are long-term debt instruments issued by companies to raise funds for various purposes. These financial instruments come with a promise to repay the principal amount along with periodic interest to the debenture holders.