The correct answer is C. Charged against the firm’s profits.
Debentures are long-term loans that a company takes out from lenders. The interest payable on debentures is a cost of doing business for the company, and it is therefore charged against the company’s profits. This means that the interest payable on debentures reduces the company’s taxable income, which in turn reduces the amount of tax that the company has to pay.
Option A is incorrect because general reserves are a type of reserve that companies can use to meet unexpected expenses or to make investments. Option B is
incorrect because falling fund investment accounts are used to fund the repayment of debentures. Option D is incorrect because appropriation of profits is the process of setting aside profits for specific purposes, such as dividends or reinvestment.