What is an example of a liability? What will be an ideal response?

QUESTION

What is an example of a liability?

What will be an ideal response?

ANSWER

Answer: Outside vendors that have provided labor but not yet been paid represent a debt to the firm and, therefore, a liability.
Explanation: A liability is a debt owed by a firm to an outside individual or organization. Outside vendors that have performed work but have not yet been paid are a liability since they are accounted for under accounts payable. Other examples include bonds and notes payable, which represent debts to the company on loans that must be paid off.