Final answer:
A promise to repay a loan under specified terms is known as a debt. It is evidence of a financial obligation that one party has to another.
Step-by-step explanation:
A promise to repay a loan under specified terms is known as a debt. It is evidence of a financial obligation that one party has to another. When a firm has a record of significant revenues and profits, it becomes possible for the firm to borrow money and make a credible promise to repay the loan.