Which of the following is a liability? A. Cash B. Equipment C. Debtors D. Creditors

Cash
Equipment
Debtors
Creditors

The correct answer is D. Creditors.

A liability is a company’s legal financial debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits, most commonly cash.

Cash is an asset, not a liability. It is something that a company owns and can use to pay its debts.

Equipment is also an asset. It is something that a company owns and uses in its operations.

Debtors are customers who owe money to a company. They are not liabilities, because they represent money that the company is owed, not money that the company owes.

Creditors are people or companies that a company owes money to. They are liabilities, because they represent money that the company must pay back.

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