How are liabilities generally defined?

Liabilities are generally understood to be financial obligations that a business owes to external parties. This includes loans, accounts payable, mortgages, and other debts that must be settled over time through the transfer of economic benefits, typically cash or other assets. Recognizing liabilities is crucial for understanding a company's financial health, as they represent claims against the company’s resources and impact its ability to invest and operate.

The other options reflect different financial concepts: assets pertain to what a business owns, future earnings involve projected income from investments, and current market valuations relate to the worth of assets at a given point in time. While these concepts are essential components of a business’s overall financial picture, they do not define liabilities, which are specifically focused on the debts and obligations a company has incurred.