Question

Explain how bonds payable are different from an installment note payable. For example, a loan.

Include specific details behind repayment of principal and interest payments.

Answer 1

One of the main difference between bonds payable and installment notes payable is, bonds payables are always considered and treated as securities and installment notes payables are not necessarily considered as securities.

As per accounting treatment bonds payables are considered as non current liabilities, where as installment notes payable may be consider as non current liabilities based on the maturity, if maturity is less than one accounting year may be treated as current liabilities.

Bonds payables are always long-term in nature and Installment notes payable are more like short term or long term, but maturity period is not greater than bonds payable.