Bond Payable

What is a Bond Payable?

A bond payable is a long term liability on the balance sheet of a business, representing an amount owed by the business to a bondholder.

Issuing bonds is a way of raising larger amounts of finance from multiple, long term investors by way of loans. Bonds are issued by a business when the loan required is too large for one investor. The loan required is split into units called bonds, and for each bond a bond payable certificate is issued to the investor (the bondholder).

The bonds will stipulate the term, known as the maturity date, and the interest rate to be used. At the maturity date the investor will receive repayment of the principal amount invested and interest. Bonds are transferable, and an investor can sell their bond before the maturity date.

A bond payable is more fully explained in our bond payable tutorial.

For further information see the Wikipedia bond payable definition.

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Last modified March 23rd, 2016 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.

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