Debt Defined

• A debt is also known as a liability and is a loan that a borrower must repay at maturity or over a specified number of installments.
  
  

Senior Unsecured Debt Defined

• An unsecured debt is a loan for which a borrower does not provide any financial guarantee or collateral. A senior debt is a loan that takes priority over other corporate debts.
  
  

Significance

• A senior unsecured debt is important for a company because it helps top leaders finance operating activities. It is advantageous to a lender because it protects loan assets in bankruptcy proceedings.
  
  

Types

• The types of senior unsecured debt products vary by industry and company, but the most common are unsecured bonds and long-term loans.
  
  

Accounting for Unsecured Debt

• To record a new senior unsecured debt transaction, an accountant debits the cash account and credits the debt payable account. In accounting parlance, debiting an asset account, such as cash, means increasing its balance.
  
  

Reporting Unsecured Debt

• An accountant reports a company's senior unsecured debt products in the corporate balance sheet.