Read the following about Liabilities.
A. Liabilities for any firm are its debts or what it owes to others.
B. For a bank, the main liability is the deposits which people keep with it.
Identify the CORRECT statement/statements.

Correct option is D

The correct answer is (d) Only A is correct.
· Statement A is correct. Liabilities for any firm indeed represent its debts or what it owes to others. This includes loans, unpaid bills, wages, or other obligations that a company must pay. Liabilities are essential to understanding the financial health of a business, as they show what the company owes to creditors or other entities.
· Statement B is incorrect because deposits in a bank are not typically considered liabilities in the traditional sense of debts owed. Instead, they are a part of the bank's responsibility to safeguard and manage customer funds. While technically the bank owes this money back to the depositor, the term "liability" is used differently in financial reporting. It’s more appropriate to call these customer deposits part of the bank’s obligation but not its core financial liability.
Information Booster:
· Firm Liabilities:
· Liabilities for firms include loans, accounts payable, accrued expenses, and other obligations.
· Firms manage liabilities to maintain solvency and balance financial growth.
· Misconception About Bank Deposits:
· While customer deposits are part of the bank's obligations, they aren't considered traditional liabilities like loans or debts. Instead, banks treat deposits as a responsibility to safeguard and return funds upon request.
· Balance Sheet:
· Liabilities and assets both appear on the balance sheet. A well-managed balance sheet shows healthy ratios between liabilities and assets.
· Types of Liabilities:
· Current liabilities: To be paid within one year.
· Long-term liabilities: To be paid over a period longer than one year.