Question

QUESTION 11-BONDS PAYABLE (5 marks) Required: In your own words (do not simply copy In your own words do not simply copy a re
0 0
Add a comment Improve this question Transcribed image text
Answer #1

A) Describe what a Bond is-

BOND is a Debt Instrument through which Organizations/companies pool up Funds/Money to finance the Projects /Operations of such organizations/Companies.

Under such Instrument, companies will assure the Bond takers regarding repayment terms along with Interest payments at a prescribed rate of Interest.

The best example of this instrument is DEBENTURES.

B)Why Issuer will prefer Bonds over Shares-

Because-

1. Shares will have preferential and Ownership rights over the company which will last over the full life of the organization, where bonds won't have such rights and can redeem once funds are arranged.

2. As per the rule of Debt equity ratio 2:1, its always preferable to finance the Projects / Operations through debt funds instead of own funds.

3. And also for short term requirements of Funds, issuers always prefer to take debts instead of Equity.

C)BOND is Liability or Equity in the Balance sheet-

BOND should be classified under Liability as it is a debt received and should repayable after a particular period of time, whereas equity amounts won't be repaid until the organization dissolved.

Add a comment
Know the answer?
Add Answer to:
QUESTION 11-BONDS PAYABLE (5 marks) Required: In your own words (do not simply copy In your...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • TABLE 15 marks) Required: In your oy in your own words (do not simply copy a...

    TABLE 15 marks) Required: In your oy in your own words (do not simply copy a response from the textbook or the internet) answer the following questions: a) Describe what a bond is? (2 marks) b) For the issuer of the bond, why would they prefer to issue bonds over shares? (2 marks) c) On a balance sheet should a bond be classified as a liability or equity? (1 marks)

  • Chapter 14 Long-Term Liabilities Directed Reading Guide LO1. How are long-term notes payable and mortgages payable...

    Chapter 14 Long-Term Liabilities Directed Reading Guide LO1. How are long-term notes payable and mortgages payable accounted for? In your own words, what is a long-term liability? Long term-liabilities are liabilities that do not need to be paid within one year or within the entity’s operating cycle, whichever is longer. Both long-term notes payable and mortgages payable are common long-term liabilities.     To record the purchase of a building for $150,000, paying $100,000 in cash and signing a 30-year mortgage...

  • ISHONI - CURRENT LABILITIES (16 marts Required: a) in your own words (de answer the following...

    ISHONI - CURRENT LABILITIES (16 marts Required: a) in your own words (de answer the following questions: in your own words do not simply copy response from the is it important for business to classify the little between current liabilities? (3 marks) other art in their stors. It will n o t than thoi'll know what kind of of short term ovigations they have to take care of. Vice vosa for Non-cumont. It piso holes with woreauty lion there. ii....

  • pls not copy paste from internet Yous your own words to do ther report that contain...

    pls not copy paste from internet Yous your own words to do ther report that contain the followings What the difference among Windows vista, 7 and 10 in installation formation ,and updating Can you upgrade directly from windows vista to windows 7 or vista and 7 to 10? or you need format?

  • Section 3: Short answer – Answer each question IN YOUR OWN WORDS. TYPE your responses and...

    Section 3: Short answer – Answer each question IN YOUR OWN WORDS. TYPE your responses and staple the printed copy to the rest of your assignment. 11) In the correct order, explain the neural mechanisms used to increase muscle force production using the concepts of summation, rate coding, recruitment, and the size principle. DO NOT simply write the definition of each concept. (3 points)

  • prepare a paragraph response for each of the questions below. Use your own words. Do not...

    prepare a paragraph response for each of the questions below. Use your own words. Do not copy directly from the text. Please number each answer. According to Boyd and Ellison, what 3 characteristics define a social network? Describe the rise of social network sites from the late 1990's until now. Include names and dates for all sites discussed in the reading. Explain how social network sites launched from 2003 onward (i.e. Facebook) are different from those that came before Hello,...

  • QUESTION IN-EQUITY SECTION OF THE BALANCE SHEET (10 marks) Listed below is Pucci Incorporated's equity Information...

    QUESTION IN-EQUITY SECTION OF THE BALANCE SHEET (10 marks) Listed below is Pucci Incorporated's equity Information as at December 31, 2018. Additional information is as follows: The preferred shares had sold for an average price of $15/share and the common shares had sold for an average of $4/share. Retained earnings at December 31, 2017 was $250,000. During 2018, profit of $130,000 was earned and dividends of $25,000 were declared. Equity Section of the Balance Sheet Ast December 11, 2018 Contributed...

  • Can you do more than one question in your own words? Group Exercise 4 1. In...

    Can you do more than one question in your own words? Group Exercise 4 1. In what ways are surety bonds not like insurance policies? 2. What is the limit of liability of a surety if the contractor defaults? 3. What does the bid bond promise to the owner? 4. What rights does a surety have in the event of a contractor default? 5. What party or parties are given the most protection by a performance bond? By payment bond?...

  • Use your own words, don't copy and paste, don't use handwriting, please. i need your references U...

    use your own words, don't copy and paste, don't use handwriting, please. i need your references URL Link please** Book: Marketing Management DEVELOP A CREATIVE BRIEF A creative brief is a structured document whose purpose is to communicate quickly and concisely to anyone who might be involved in the creation of promotional materials for a product. The key to making the project a success starts with having a thorough and well-thought-out creative brief. It explains the ins and outs of...

  • please read carefully YOUR TASK: You are required to construct SEVEN mini essays (around 500 words...

    please read carefully YOUR TASK: You are required to construct SEVEN mini essays (around 500 words each) to address the topics given below. The content of the essays must be bascd on the six journal articles, which will be provided by the lecturer. Additional sources/materials are welcomed, but only credible sources should be sought. Topics that you should discuss: 1) Provide an overview of change in organizations. E.g. What is organizational change? What are the types? What are some of...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT