Which of the following is an example of a liability a company would routinely incur to acquire the funds,goods,and services they need to operate?
A)borrowing money obligates the company to repay the loan
B)buying assets for cash obligates the company to pay for them
C)buying assets on credit obligates the company to produce goods
D)using the knowledge,time,and skill of employees obligates the company to pay for their use
E)both A and B
F)both D and E

Question

Quizplus · Accepted Answer

Liabilities are obligations of a company arising from past transactions or events, leading to an outflow of resources embodying economic benefits. Borrowing money (A) creates a financial obligation to repay the loan, often with interest, which is a liability. Buying assets on credit (not mentioned in the correct options but implied in the explanation for completeness) also creates a liability, as it obligates the company to pay for these assets in the future. Using employees' knowledge, time, and skills (D) obligates the company to compensate them, typically in the form of wages or salaries, which is another form of liability. Therefore, both borrowing money and employing workers create liabilities for a company, making option F (both D and E) the correct answer.

Which of the Following Is an Example of a Liability