Bond

Accounting Terms Dictionary

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Bond

When a company wants to borrow money, it issues a bond. The company would probably use an investment banker to get the money it needed from investors. If the company issued a five year bond, it would then be obligated to pay interest on the money it borrowed for five years then repay the principal at the end of year five. The bond would be classified as a long term liability.

The phrase “issued a bond” really means “borrowed money”.

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