Which of the following is a liability?

• A. Asset
• B. Owner's Equity
• C. Liability
• D. Revenue

Answer: (C)

Liabilities are obligations the business must settle in the future. They arise from past transactions and require a future outflow of resources, such as loans, accounts payable, or amounts owed for services not yet paid. On the balance sheet, assets equal liabilities plus owner's equity, showing that resources come from either creditors or owners. An asset is something the company owns that will provide future benefits. Owner's equity is the owners’ claim on the business after liabilities. Revenue is income earned from operating activities that increases equity, not an obligation. Because a liability is specifically about a future commitment to pay or perform, this concept matches the item described.