Question 40 of 85beginner🧠 RememberTrue / False1 mark
The payment of interest on debentures is a charge on the profits of the company.
Correct Answer
True. Interest on debentures is a charge against the profit of the company and must be paid whether the company has earned any profit or not.
Exercise: Test your Understanding-I | Q: 2 | (Chapter: 35)
For More Understanding
Explanation
The provided text in section 2.9 explicitly states that 'Interest on debenture is a charge against the profit of the company'. This means it is a mandatory financial obligation that must be settled regardless of the company's profitability status, distinguishing it from dividends which are appropriations of profit.