Which of the following best describes a liability? Liabilities are:
A)a form of paid-in capital.
B)future economic benefits to which a company is entitled.
C)debts payable to outsiders called creditors.
D)economic obligations to owners to be paid at some future date by the corporation.

Question

Quizplus · Accepted Answer

Liabilities are debts payable to outsiders called creditors. They are obligations that a company owes to others.

Note: A is incorrect because paid-in capital is a form of equity, not liability. B is incorrect because future economic benefits are assets, not liabilities. D is incorrect because economic obligations to owners are also known as equity, not liability.

Which of the Following Best Describes a Liability? Liabilities Are