Which term describes the debts owed to others by a business?

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Prepare for the ITEC Professional Conduct and Business Awareness Exam with multiple choice questions. Each question is designed to enhance your knowledge and ready you for your exam. Learn detailed explanations and insights to ensure you ace your test!

Multiple Choice

Which term describes the debts owed to others by a business?

Explanation:
Debts owed to others by a business are liabilities. This category includes obligations the company must settle in the future, such as loans, accounts payable to suppliers, and taxes payable, and they appear on the balance sheet as claims against the company’s assets. They’re distinct from assets (what the company owns), revenue (income from business activities), and cash flow (the movement of cash in and out). So, the term that best describes these debts is liabilities.

Debts owed to others by a business are liabilities. This category includes obligations the company must settle in the future, such as loans, accounts payable to suppliers, and taxes payable, and they appear on the balance sheet as claims against the company’s assets. They’re distinct from assets (what the company owns), revenue (income from business activities), and cash flow (the movement of cash in and out). So, the term that best describes these debts is liabilities.

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