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

All of the following are true about bonds except:

Bondholders are considered creditors of the issuing entity.

Bondholders have ownership rights in the issuing company.

Interest payments on bonds are typically made periodically to bondholders.

Bonds are a form of long-term debt issued by corporations or governments.

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Verified step by step guidance

Step 1: Understand the concept of bonds. Bonds are financial instruments that represent a form of long-term debt issued by corporations or governments to raise capital. Bondholders lend money to the issuer in exchange for periodic interest payments and the repayment of the principal amount at maturity.

Step 2: Clarify the role of bondholders. Bondholders are considered creditors of the issuing entity, meaning they have a claim on the issuer's assets in case of default, but they do not have ownership rights in the company.

Step 3: Review the characteristics of bonds. Bonds typically involve periodic interest payments (known as coupon payments) to bondholders, which are calculated based on the bond's stated interest rate and face value.

Step 4: Differentiate between bondholders and shareholders. Shareholders have ownership rights in the company, including voting rights and a claim on profits (dividends). Bondholders, on the other hand, do not have ownership rights; their relationship with the issuer is strictly creditor-based.

Step 5: Identify the incorrect statement. Based on the explanation above, the statement 'Bondholders have ownership rights in the issuing company' is incorrect because bondholders are creditors, not owners.