What is defined as debts or obligations owed to others?

Liabilities refer to the financial obligations or debts that a business or individual owes to outside parties. This can include loans, accounts payable, mortgages, and other forms of debt. Liabilities are a key component in financial statements, as they represent the claims creditors have on the assets of the business. Understanding liabilities is essential for assessing the solvency and financial health of an entity, as they indicate the extent to which an organization is financed by debt.

In contrast, assets are resources owned by the entity, while equity represents the ownership value remaining after liabilities are deducted from assets. Bonds are a specific type of liability, as they are debt securities issued by an entity to raise capital, but they do not encompass the broader category of all obligations. Thus, the definition focusing specifically on debts and obligations aligns precisely with the term "liabilities."