An obligation of a business that represents the claims of others against the assets of the business is called a(n):
A)Expense.
B)Equity.
C)Liability.
D)Revenue.
E)Asset.

Question

Quizplus · Accepted Answer

A liability represents an obligation of a business to others. It can arise from borrowing money, purchasing goods or services on credit, or other legal claims. Liabilities represent claims against the assets of the business, meaning that if the business cannot meet its obligations, its assets may be used to pay off its debts. Examples of liabilities include accounts payable, loans payable, and taxes payable.

An Obligation of a Business That Represents the Claims of Others