Final answer:
The correct option is Option 4: Liability. When a company borrows money, it creates a legal obligation to repay the loan. Liabilities represent the company's debts and must be repaid according to the terms agreed upon.
Step-by-step explanation:
The correct option is Option 4: Liability. When a company borrows money, it creates a legal obligation to repay the loan. This obligation is known as a liability. Liabilities are financial obligations that a company owes to others, such as loans, bonds, or mortgages. These liabilities represent the company's debts and must be repaid according to the terms agreed upon.