Final answer:
Bonds owned by an entity are listed as assets on the balance sheet, while bonds owed are accounted for as liabilities. The T-account format of a balance sheet clearly outlines the financial position, including bond-related transactions.
Step-by-step explanation:
Regarding a bond on a balance sheet, the accounts that appear would typically include assets for the bonds that the entity owns, and liabilities for the bonds that the entity owes. When a corporation issues a bond, it is essentially borrowing money from investors, and hence, the amount to be repaid is accounted for as a liability on the company's balance sheet. Conversely, if the company owns bonds of another entity, these bonds are considered investments and are listed as assets.
For illustration, consider a bank's simplified balance sheet. On the asset side, it would include cash, loans to customers, and bonds that the bank holds. Liabilities would consist of deposits from customers, possible bank debt, and other obligations. The balance sheet represents the financial position of a bank at a certain point in time and is typically presented in a T-account format. Changes in a bank's holdings, such as purchasing Treasury bonds or converting bond sale proceeds into new loans, would be reflected in the balance sheet's assets and liabilities accordingly as shown in Figure 13.5, 14.5, and 27.5 from the referenced material.