Bond
Financial Accounting glossary · Liabilities & Bonds Payable
Definition
Debt security obligating the issuer to pay periodic interest and to repay principal at maturity.
Bond in plain English
A bond is basically an IOU you can buy. When a company or government needs money, it borrows from investors by issuing bonds; in return it promises to pay you interest regularly (like a thank-you for the loan) and to pay back the full amount you lent (the "principal") on a set future date ("maturity"). Think of lending a friend $100 who agrees to pay you $5 a year and hand back your $100 in five years — a bond is that same deal, just formalized and tradeable.
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