Question

Arrange the following in the correct sequence in the context of debenture:
(A) Payment to debenture-holders
(B) Creation of DRR
(C) Issue of debentures
(D) Redemption becomes due.

• A. (A), (B), (C), (D)
• B. (A), (C), (B), (D)
• C. (B), (A), (D), (C)
• D. (C), (B), (D), (A)

Answer 1

The Correct Option is D

When dealing with the issuance and redemption of debentures in accountancy, the operations typically proceed in the following sequence: 

1. Issue of Debentures (C): This is the initial step where the company issues debentures to raise funds. Debentures are debt instruments used by a company to borrow money from investors.
2. Creation of Debenture Redemption Reserve (DRR) (B): After issuing debentures, the company is required to create a DRR to ensure that funds are reserved for the redemption of these debentures in the future. This reserve acts as a safeguard for investors.
3. Redemption Becomes Due (D): As the maturity period approaches, the company prepares to fulfill its obligation to repay the debenture holders. The redemption process includes ensuring that the necessary funds from the DRR are available.
4. Payment to Debenture-Holders (A): Finally, the company makes the actual payment to the debenture holders, fully settling the debt obligation.

Thus, the correct sequence is (C), (B), (D), (A).

Answer 2

In this question, we need to arrange the steps involved in the process of debenture management in the correct sequence.

Let’s break down each step and understand the process:

(C) Issue of debentures:
The first step is issuing the debentures to raise funds. This occurs before any redemption or payment.

(B) Creation of DRR:
The creation of a Debenture Redemption Reserve (DRR) occurs after the issue of debentures, as the company must set aside funds for the eventual redemption of the debentures.

(D) Redemption becomes due:
This happens after the creation of the DRR. The redemption becomes due when the debentures mature and are ready to be paid back.

(A) Payment to debenture-holders:
Finally, once the redemption becomes due, the payment is made to debenture-holders.

Thus, the correct sequence is:

1. (C) Issue of debentures
2. (B) Creation of DRR
3. (D) Redemption becomes due
4. (A) Payment to debenture-holders

Therefore, the correct answer is:

(4) (C), (B), (D), (A)