Bonds payable are a type of long-term debt that companies or governments issue to raise funds. When an entity issues bonds, it borrows money from investors, promising to pay back the principal amount on a specific date, known as the maturity date, along with periodic interest payments, called coupon payments. Investors who buy these bonds become creditors and receive interest as compensation for lending their money. Bonds payable are recorded as liabilities on the issuer's balance sheet, reflecting the obligation to repay the borrowed funds in the future.