ExpertEasy1 markMultiple Choice
ACCA · Question 36 · Capital and the financing of companies
Section A
Which of the following best defines a 'debenture'?
Section A
Which of the following best defines a 'debenture'?
Answer options:
A.
A share in the equity of the company.
B.
A document issued by a company acknowledging a debt.
C.
A dividend payment made to shareholders.
D.
The legal process of winding up a company.
How to approach this question
Distinguish between loan capital and share capital terminology.
Full Answer
B.A document issued by a company acknowledging a debt.✓ Correct
In corporate law, a debenture is a document issued by a company that acknowledges a debt. It is the standard term used for the loan capital of a company, and it may or may not be secured by a charge over the company's assets.
Common mistakes
Confusing debentures with shares.
Practice the full ACCA LW — Corporate and Business Law Practice Exam 6
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