The debentures are known as creditors ship capital of the company.

Question

State to whether the following statement is True/False.

The debentures are known as creditors ship capital of the company.

Options

• True
• False

Answer 1

True

Explanation: Debentures are debt instruments issued under the common seal of a company to its debenture holders. They are regarded as the creditors of the company as against the owners who are the ‘equity shareholders’. Capital financed through debentures is known as debt capital or creditors’ share capital of the company.