Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

Financial Accounting

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

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Multiple Choice

If the Apple Corporation sells a bond, it is:

Purchasing an investment security

Issuing equity to shareholders

Paying off an existing liability

Borrowing money from investors

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Verified step by step guidance

Step 1: Understand the concept of a bond. A bond is a fixed-income instrument that represents a loan made by an investor to a borrower, typically a corporation or government. It is a way for companies to raise capital by borrowing money from investors.

Step 2: Recognize the role of the bond issuer. When a corporation, such as Apple, sells a bond, it is acting as the borrower. The corporation receives money from investors in exchange for a promise to repay the principal amount at maturity along with periodic interest payments.

Step 3: Differentiate between borrowing money and other financial activities. Selling a bond is not the same as purchasing an investment security (which involves acquiring assets), issuing equity (which involves selling ownership shares), or paying off an existing liability (which involves settling debts).

Step 4: Relate the bond sale to borrowing money. By selling a bond, Apple Corporation is effectively borrowing money from investors, as the investors are providing funds in exchange for the bond's future repayment terms.

Step 5: Confirm the correct answer. Based on the explanation above, the correct answer to the problem is that selling a bond means Apple Corporation is borrowing money from investors.