What are liabilities?

Liabilities refer to financial obligations or debts that an individual or organization is required to pay in the future. They include loans, mortgages, credit card balances, and any other type of debt that needs to be settled. Understanding liabilities is essential for effective personal finance management, as they represent claims against the individual’s assets and can impact financial stability. By recognizing liabilities, one can assess their overall financial health, make informed decisions about spending and saving, and plan for future expenses such as loan repayments.

The other options do not accurately define liabilities. A source of income refers to money received, such as salaries or business profits; properties owned by an individual describe assets, not liabilities; and assets that are not performing refers to investments or possessions that aren’t yielding returns, which also doesn’t align with the definition of liabilities.