Final answer:
Obligation and debt of a business are referred to as liabilities, and they represent what the business owes, such as loans or mortgages. This is reflected in a balance sheet, a tool that lists both assets and liabilities, and shows a company's net worth.
Step-by-step explanation:
The obligation and debt of a business, or what a business owes, are referred to as liabilities. A liability is a debt or something you owe, such as a mortgage on a property you own. The home would be considered an asset, while the mortgage would be a liability. A balance sheet is an accounting tool used by businesses, including banks, to list both assets and liabilities. On a bank's balance sheet, assets might include cash in vaults or loans made to customers, whereas liabilities include deposits made at the bank by customers. The difference between assets and liabilities represents a bank's net worth or bank capital, and on a T-account, assets will always equal liabilities plus the bank's net worth.