What are liabilities?

Liabilities refer to the financial obligations that an individual or organization owes to others, representing debts or commitments that need to be settled in the future. These can include loans, mortgages, credit card debts, and any other financial responsibilities that arise from borrowing money or purchasing goods and services on credit. Understanding liabilities is crucial in personal finance as they affect cash flow and financial health.

In contrast, the other options provided refer to different financial concepts: assets that generate income are sources of wealth, investments appreciating over time relate to capital growth, and government grants or funds do not involve a debt or obligation. These distinctions clarify the fundamental nature of liabilities as commitments that require future outflows of resources.