Question

Debentures are shown in Balance Sheet of a company under the head of:

• A. Share Capital
• B. Debenture Capital
• C. Non-current Liabilities
• D. Current Liabilities

Hint:

Debentures are classified under non-current liabilities in the balance sheet because they represent long-term debt, usually payable over more than a year.

Answer 1

The Correct Option is C

Step 1: Understanding the nature of debentures.
Debentures are long-term debt instruments issued by a company to raise funds. They are considered non-current liabilities because they are usually due after a period of more than one year.
Step 2: Analysis of options.

• (A) Share Capital: Incorrect. Share capital refers to the funds raised through the issue of shares, not through debentures.
• (B) Debenture Capital: Incorrect. This term is not typically used in financial reporting. Debentures are recorded under liabilities, not as capital.
• (C) Non-current Liabilities: Correct. Debentures are shown under non-current liabilities in the balance sheet as they are long-term debts.
• (D) Current Liabilities: Incorrect. Current liabilities are short-term obligations due within one year. Debentures are long-term liabilities.

Step 3: Conclusion.
Debentures are shown under non-current liabilities in the balance sheet as they represent long-term financial obligations. Final Answer:} Non-current Liabilities.