Which of the following best describes a liability?

A liability is best described as a financial obligation of the business. This includes any debts or obligations that the business must pay to outsiders, such as loans, accounts payable, and other financial commitments. Liabilities are a crucial aspect of a company's balance sheet, representing what the company owes to creditors and indicating the financial health and stability of the business. Properly managing liabilities is essential for maintaining a positive cash flow and ensuring the operational efficacy of the business. By understanding liabilities, businesses can make better financial decisions, plan for future growth, and assess their overall financial risks.