Bonds Payable


Issuing long-term bonds represents an important source of financing for many large companies.  The accounting term bond payable is used to categorize the payments due when a company issues an indenture or enters into a contract that represents a promise to pay.  Since bonds payable represent a long term obligation of the company, they are shown in the long term liabilities section of the balance sheet.


A company can issue bonds, and therefore bonds payable, that have different rules or features.  Generally, the obligation under bonds payable takes one of the following two forms:

  • Interest charges on the bond, which will be paid to the bondholder at a specified rate and frequency.
  • A fixed value to the bondholder, which represents the face value of the bond, where payment occurs on a specified maturity date.

While the liability associated with this debt appears on the balance sheet, the payment of interest due on bonds flows through the income statement as interest expense.

Related Terms

liabilities, long-term liabilities, interest expense, debenture bond, bond sinking fund, act of bankruptcy