Which of the following items is a liability?

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Multiple Choice

Which of the following items is a liability?

Explanation:
A liability is an obligation to repay someone else—an amount you owe. A student loan fits this because you borrowed money and must repay the lender, creating a debt you are obligated to settle. Cash, stocks, and jewelry are all assets: cash is money you own; stocks are ownership stakes in companies; jewelry is a personal item of value. On a balance sheet, liabilities represent what you owe, while assets represent what you own. Taking out a loan increases both cash (an asset) and the corresponding liability (the obligation to repay), reinforcing why the student loan is the liability.

A liability is an obligation to repay someone else—an amount you owe. A student loan fits this because you borrowed money and must repay the lender, creating a debt you are obligated to settle. Cash, stocks, and jewelry are all assets: cash is money you own; stocks are ownership stakes in companies; jewelry is a personal item of value. On a balance sheet, liabilities represent what you owe, while assets represent what you own. Taking out a loan increases both cash (an asset) and the corresponding liability (the obligation to repay), reinforcing why the student loan is the liability.

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