Appropriations for bonded indebtedness restrict a company's ability to pay dividends to shareholders. It requires that part of retained earnings be set aside for the repayment of bonds. Appropriations do not have a direct relationship to the bond sinking fund. Whenever an appropriation is made, Retained Earnings is debited and Appropriation for Bonded Indebtedness credited.
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APPROPRIATION FOR BONDED INDEBTEDNESS
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