CBSE Class 12 Accountancy Chapter 7 Notes: Issue and Redemption of Debentures PDF

Our CBSE Class 12 Accountancy Chapter 7 notes (Issue And Redemption Of Debentures) curated by industry-leading subject matter experts feature a wide array of practice questions, real-world examples, and tailored CUET commerce practice tests. These Accounts study notes simplify complex financial concepts, making it easy to master debenture accounting, share capital nuances, and critical financial ratios. If you find these topics challenging, our structured Chapter 7 notes are designed to boost your conceptual clarity.

CBSE Class 12 Accountancy Chapter 7 Notes

These CBSE Class 12 Accountancy 2026 revision notes offer an in-depth analysis of the Issue and Redemption of Debentures. Accelerate your exam preparation with our Careers Adda Class 12 Accountancy Revision Notes. Featuring concise summaries, key definitions, and step-by-step solved examples, these notes are perfect for both daily study sessions and last-minute exam reviews.

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Accountancy Notes for Chapter 7 – Issue And Redemption Of Debentures

Get a quick overview of the essential highlights from our Accountancy Chapter 7 notes below:

Understanding Debentures

The term 'debenture' originates from the Latin word 'debere,' meaning 'to borrow.'
• Definition: A debenture is a formal written instrument issued under a company's seal that acknowledges its debt obligation.
• Contractual Terms: It outlines the contract for principal repayment at a set time or intervals, alongside fixed interest payments.
• Legal Framework: Per Section 2(30) of The Companies Act, 2013, 'Debenture' encompasses debenture stock, bonds, and any other company securities, regardless of whether they constitute a charge on assets.
• Financial Nature: Capital acquired via debentures is classified as long-term debt.

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Comparison Example: Comparing 1,000 Equity Shares vs. 1,000 (10%) Debentures (Face Value ₹100 each):
• Share Capital = 1,000 × 100 = ₹1,00,000.
• Debenture Debt = 1,000 × 100 = ₹1,00,000.
• Debenture Interest = ₹1,00,000 × 10% = ₹10,000 (Fixed Charge).
• Share Dividend = Variable, based on residual profit (Appropriation).

Classification of Debentures
1. By Security:
• Secured Debentures: Backed by a charge on assets (fixed or floating) for guaranteed payment.
o Fixed Charge: Linked to specific assets.
o Floating Charge: Linked to general company assets.
• Unsecured (Naked) Debentures: Issued without asset-backed security.
2. By Tenure:
• Redeemable Debentures: Payable after a fixed term via lump sum or installments.
• Irredeemable (Perpetual) Debentures: Repayable only upon winding-up or extremely long durations.
3. By Convertibility:
• Convertible Debentures: Can be converted into equity shares or other securities.
• Non-Convertible Debentures: Cannot be converted into other securities.

4. By Coupon Rate:
• Specific Coupon Rate Debentures: Issued with a fixed or floating interest rate linked to the bank rate.
• Zero Coupon Rate Debentures: Issued at a significant discount to compensate for lack of interest payments.
o Total Gain = Nominal Value − Issue Price.
5. By Registration:
• Registered Debentures: Ownership details are maintained in the company register; transfer requires a deed.
• Bearer Debentures: Transferred by delivery; no holder records maintained; interest paid to whoever produces the coupon.

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