Question

If debentures purchased in open market are not immediately cancelled, they are treated as:


current assets
current liabilities

investment

capital

Answer 1

Answer:

The profit or loss on cancellation (i.e., difference between face value of debentures and real cost) will be transferred to Sinking Fund Account. ... For accrued interest on debentures so purchased, Sinking Fund Cash Account will be debited and General Cash Account will be credited.