Final answer:
Option c) Liability refers to financial responsibilities is the correct answer because it distinguishes liability as a business's financial duties, while legal obligations encompass all duties a business must fulfill under the law.
Step-by-step explanation:
The question asks about the difference between a business's liability and its legal obligations. Option c) Liability refers to financial responsibilities is the correct choice that differentiates the two terms. Liability in a business context generally relates to the company's financial responsibilities, such as debts or damages that must be paid due to legal action or breach of contract.
On the other hand, the term 'legal obligation' is broader and encompasses all duties that a business is required to fulfill under the law, which could include adherence to regulations, contract fulfillment, and other statutory requirements. For instance, a business that pollutes a river has a legal obligation to abide by environmental laws and a liability to pay for the cleanup and any associated penalties. The corporate world's concept of 'social responsibility' also reflects how businesses may take on additional ethical responsibilities that go beyond the legal minimums.