Question

Which of the following statements is not true about liabilities?

A) Liabilities represent debts and obligations
B) Examples of liabilities include loans and mortgages
C) Liabilities are recorded on the balance sheet
D) Liabilities always have a positive impact on the financial health of an entity

Answer 1

Statement D) 'Liabilities always have a positive impact on the financial health of an entity' is not true about liabilities, as they can have either a positive or negative impact.

Step-by-step explanation:

The question is asking which statement about liabilities is not true. Here are the responses to each statement:

• A) Liabilities do indeed represent debts and obligations.
• B) Loans and mortgages are common examples of liabilities.
• C) Liabilities are definitely recorded on the balance sheet.
• D) The statement that liabilities always have a positive impact on the financial health of an entity is incorrect. Liabilities can have either a positive or negative impact depending on various factors, such as the entity's ability to manage and repay its debts.

Therefore, the statement which is not true about liabilities is D) Liabilities always have a positive impact on the financial health of an entity.