Question

It is a long term source of business the holder of which are called creditors of the company. It is complusory to  interest on this source by the company, it has to be redeemed after a period of time.

 a) ldentify the source of finance 

b) List any two advantages of the identified source of finance.​

Answer 1

Answer:

a)The sources of Finance is Debenture.

b) 2 Advantages:-

• Ideal for safe investors: It is preferred by investors who want fixed income at lesser risk.
• Tax Benefits: Interest paid on debentures is allowed as deduction in computation of taxable income. This results in tax relief for the company.