Professional accountants may encounter varying levels of debt depending
on the companies they work for. Regardless of how much debt a company
has, it is important to be able to manage long-term liabilities to avoid
insolvency.
Many companies choose to issue bonds, and it is crucial for accountants to
understand not only the characteristics of bonds but also how to
appropriately account for them. Bonds may have a current and noncurrent
component. When accounting for bonds, be sure to show interest separate
from the principles on the balance sheet. This allows for more accurate
analysis of debt and a clearer presentation of obligations.
References
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate accounting: Reporting
and analysis. Boston, MA: Cengage Learning.
