What is the meaning and definition of debenture?

A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, they must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.

What is the meaning of debentures in accounting?

Definition: A medium or long term debt format that large companies use to borrow money. A debenture is one of the most typical forms of long term loans that a company can take. In the US, most debentures are unsecured, but elsewhere debentures are typically secured through the borrower’s assets.

What are debentures of a company?

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The interest paid to them is a charge against profit in the company’s financial statements.

What is another word for debentures?

What is another word for debenture?

What are the two features of debentures?

Features of Debentures:

• Debenture holders are the creditors of the company carrying a fixed rate of interest.
• Debenture is redeemed after a fixed period of time.
• Debentures may be either secured or unsecured.
• Interest payable on a debenture is a charge against profit and hence it is a tax deductible expenditure.

What is the purpose of a debenture?

Debentures. Debentures generally have a more specific purpose than other bonds. While both are used to raise capital, debentures typically are issued to raise capital to meet the expenses of an upcoming project or to pay for a planned expansion in business.

What are the classification of debentures?

There are various types of debentures like redeemable, irredeemable/perpetual, convertible, non-convertible, fully secured, partly secured, mortgage, unsecured, naked, first mortgaged, second mortgaged, the bearer, fixed, floating rate, coupon rate, zero-coupon, secured premium notes, callable, puttable, etc.

What is a debenture class 12?

Debenture: It is a document issued by a company under its common seal acknowledging the debt and it also contains the terms of repayment of debt and payment of interest at a specified rate.

What is IOU in full?

An IOU, a phonetic acronym of the words “I owe you,” is a document that acknowledges the existence of a debt.

What are the characteristics of debentures?

Characteristics of Debenture

• Written promise.
• Company Seal.
• Borrowed Funds.
• Maturity Period.
• Claim in Income.
• Priority Claim on Assets.
• No Controlling Power.
• Fixed Rate of Interest.