Future Business Leaders of America (FBLA) Agribusiness Practice Test

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Enhance your FBLA Agribusiness knowledge with our comprehensive test. Dive into flashcards and multiple-choice questions, complete with hints and explanations, to ensure exam success. Prepare confidently for a bright future!

Practice this question and more.

Which of the following is an example of a liability?

Cash in the bank
An outstanding loan
Product inventory
Land owned by the business

The correct answer is: An outstanding loan

A liability is a financial obligation that a business owes to third parties, which often results from borrowing or purchasing on credit. An outstanding loan represents a commitment to pay back borrowed funds, making it a clear example of a liability. This type of obligation is typically recorded on the balance sheet and includes loans, accounts payable, and other debts that the business must settle. In contrast, cash in the bank is an asset, as it represents liquid funds available to the business. Product inventory also qualifies as an asset since it consists of goods held for sale. Similarly, land owned by the business is classified as a fixed asset, reflecting the ownership of real estate that can appreciate over time. Thus, the outstanding loan stands out as the correct answer because it directly embodies the concept of a liability that impacts the financial health and obligations of a business.