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Assertion (A): Sarita Pvt. Ltd. issued 15% 10,000 debentures at par @ ₹ 100 per debenture. The company suffered a loss but still the directors of the company paid interest on debentures. -

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Question

Assertion (A): Sarita Pvt. Ltd. issued 15% 10,000 debentures at par @ ₹ 100 per debenture. The company suffered a loss but still the directors of the company paid interest on debentures.

Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit.

Options

  • Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

  • Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

  • Assertion (A) is true, but Reason (R) is false.

  • Assertion (A) is false, but Reason (R) is true.

MCQ

Solution

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

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Issue of Debentures
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