The total capitals of joint stock companies are often divided into owner’s capital and borrowed capital.
Share capital is owner’s capital whereas debenture is considered as fixed cost borrowed capital.
Debenture is a long-term loan.
Companies can raise additional capital by issuing debentures.
Debenture holders receive fixed income as interest during the loan period.
They do not have the voting right.
Debentures are written promise for a debt.
Company issues debentures under its seal which contains the terms and conditions regarding the amount of loan or principal, the rate of interest, maturity date, maturity value etc.
In other words, debenture is a certification of acknowledgment issued with the seal of company in favour of lender as an evidence of debt.
This document grants the holder the right to receive interest and return of principal as per the terms under which debentures are issued.
#####
Click on link for YouTube videos
SHARE (ACCOUNTING FOR SHARE) http://tiny.cc/889jkz
SHARE IN Nepali http://tiny.cc/k99jkz
DEBENTURES http://tiny.cc/yeakkz
FINAL ACCOUNT: CLASS 12 http://tiny.cc/e89jkz
FINAL ACCOUNT IN NEPALI http://tiny.cc/w89jkz
WORK SHEET http://tiny.cc/579jkz
RATIO ANALYSIS (ACCOUNTING RATIO) http://tiny.cc/4fakkz
FUND FLOW STATEMENT http://tiny.cc/wiakkz
CASH FLOW STATEMENT http://tiny.cc/8gakkz
THEORY ACCOUNTING XII http://tiny.cc/nfakkz
THEORY: COST ACCOUNTING http://tiny.cc/tfakkz
COST ACCOUNTING http://tiny.cc/p29jkz
LIFO−FIFO http://tiny.cc/dgakkz
COST SHEET, UNIT COSTING http://tiny.cc/w49jkz
COST RECONCILIATION STATEMENT http://tiny.cc/829jkz
#####
A limited company collects beginning capital from equity shares capital.
The company may require additional money for its expansion and development.
For this purpose, the company can borrow from public.
Debentures are one of way to take medium term or long-term loan from public.
The capital and loan ratio should be in 3:2 i.e. capital 60% and long-term loan 40%.
Debentures are also known bonds and debt but there are slightly differences.
The owner of debentures is called debenture holders.
Debentures have fixed interest rate and maturity period.
Normally, interest is payable annually or sometime half yearly.
Debenture holders have priority to receive interest and refund money before equity shareholder at the time dissolution of firm.
The company returns amount of debenture to the holders at the end of predetermined maturity period.
Definition “Debentures are a debt or loan raised by a company under the seal of the company.” According to Company Act, “A trustee is necessary to raise or issue debentures or debt capital.” |
***********
Thank you for investing your time.
Please comment on article.
You can help me by sharing this article at your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल, जय युट्युब, जय सोशल मीडिया
***********