Types of Long-Term Debt instruments Income Bond -a bond where the payment of interest is contingent upon sufficient earnings of the firm Frequently, there is a cumulative feature, which provides that any unpaid interest in a particular year accumulates. The cumulative obligation is usually limited to no more than three years. The bonds are unpopular with investors(usually limited to reorganizations), but are still senior to preferred and common shareholders in the event of 20-7quidation.20-7 Types of Long-Term Debt Instruments Frequently, there is a cumulative feature, which provides that any unpaid interest in a particular year accumulates. The cumulative obligation is usually limited to no more than three years. The bonds are unpopular with investors (usually limited to reorganizations), but are still senior to preferred and common shareholders in the event of liquidation. Income Bond -- A bond where the payment of interest is contingent upon sufficient earnings of the firm