ExpertEasy1 markMultiple Choice
ACCA · Question 38 · Capital and the financing of companies
Section A
In company law, what is a debenture?
Section A
In company law, what is a debenture?
Answer options:
A.
A type of preference share.
B.
A document issued by a company acknowledging a debt.
C.
A court order to wind up a company.
D.
A register of the company's shareholders.
How to approach this question
Define the term 'debenture' in the context of corporate finance.
Full Answer
B.A document issued by a company acknowledging a debt.✓ Correct
A debenture is a document that either creates a debt or acknowledges it. It is the standard term used for a company's long-term loan capital, often secured by a charge over the company's assets.
Common mistakes
Confusing debentures (loan capital) with shares (equity capital).
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