Liabilities are
A)sometimes credit and other times debit balances.
B)deferred amounts which will be recognized on the balance sheet when the actual due date arrives.
C)obligations arising from past transactions and payable in assets or services in the future.
D)obligations to transfer ownership of one company to other entities.

Question

Quizplus · Accepted Answer

Liabilities represent obligations (such as debts, loans or payments owed) that a company has to third parties or suppliers, and are payable in future in the form of assets or services. Therefore, choice C is the best-suited option to define liabilities. A and D are incorrect because liabilities can have either credit or debit balances, and they do not involve the transfer of ownership of a company to other entities. B is incorrect because deferred amounts are typically recognized as liabilities when they originate, not when they come due.

Liabilities Are