What are liabilities in business finance?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Get ready for the FIPA 2 Exam. Prepare with flashcards and multiple-choice questions, each with hints and explanations. Ace your test!

Multiple Choice

What are liabilities in business finance?

Explanation:
Liabilities are the obligations a business owes to others. They are debts and other duties the company must settle in the future, such as loans it has borrowed and needs to repay. This is why the phrase "loans you owe" is the best fit: a loan creates a debt obligation that the business is required to pay back. Tangible property is an asset the company owns. Equity is the owners’ claim on the assets after liabilities are accounted for. Cash flow describes the movement of cash in and out, not an obligation owed to someone else.

Liabilities are the obligations a business owes to others. They are debts and other duties the company must settle in the future, such as loans it has borrowed and needs to repay. This is why the phrase "loans you owe" is the best fit: a loan creates a debt obligation that the business is required to pay back.

Tangible property is an asset the company owns. Equity is the owners’ claim on the assets after liabilities are accounted for. Cash flow describes the movement of cash in and out, not an obligation owed to someone else.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy