ExpertEasy1 markMultiple Choice
ACCA · Question 35 · Syllabus E: Capital and the financing of companies
In company law, what is a debenture?
In company law, what is a debenture?
Answer options:
A.
A document acknowledging a debt owed by the company, often secured by a charge over assets.
B.
A type of equity share that carries no voting rights.
C.
A statutory register of the company's members.
D.
A resolution passed by the creditors of an insolvent company.
How to approach this question
Define the term used for corporate loan capital.
Full Answer
A.A document acknowledging a debt owed by the company, often secured by a charge over assets.✓ Correct
A debenture is a document issued by a company that acknowledges a loan. It is the standard method by which companies borrow large sums of money. Debentures are usually, but not always, secured by a fixed or floating charge over the company's assets.
Common mistakes
Confusing debentures (debt) with shares (equity).
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