Question

multiple select question
select all that apply
which of the following statements is (are) correct regarding the definition of a liability?

a liability is a thing of value owned by the business and is increased on the left side of a t - account.
a liability can be settled by transferring assets or providing products or services to others.
a liability is a claim by creditors against the assets of a business.
a liability is an asset waiting to be received by a business.
a liability is a debt owed by the business.

Explanation:

• Option A describes an asset (owned value, increased on T-account debit/left side), not a liability.
• Option B aligns with liability settlement rules: obligations are fulfilled via assets, goods, or services.
• Option C correctly defines liabilities as creditor claims on business assets.
• Option D refers to an accounts receivable (asset), not a liability.
• Option E is a core definition: liabilities are amounts the business owes.

Answer:

B. A liability can be settled by transferring assets or providing products or services to others.
C. A liability is a claim by creditors against the assets of a business.
E. A liability is a debt owed by the business.