Long-term liabilities that represent money loaned to the firm by bondholders that must be paid back are called payable.
Question
Long-term liabilities that represent money loaned to the firm by bondholders that must be paid back are called payable.
Solution
The long-term liabilities that represent money loaned to the firm by bondholders that must be paid back are called "Bonds Payable".
Here are the steps to understand this:
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Long-term liabilities: These are financial obligations that a company expects to pay after one year. They are recorded on the company's balance sheet.
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Money loaned to the firm by bondholders: This refers to the process where the company borrows money from investors (bondholders) by issuing bonds. The company promises to pay back the borrowed amount plus interest over a specified period.
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Must be paid back: This refers to the company's obligation to repay the borrowed amount (principal) plus interest to the bondholders at a specified future date (maturity date).
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Called Bonds Payable: The term for this type of long-term liability is "Bonds Payable". It represents the amount that the company owes to bondholders and must pay back in the future.
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