Multiple Choice
A current liability is a debt that can reasonably be expected to be paid:
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9. Current Liabilities
Types of Liabilities
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Which of the following best describes the amount a country owes to foreign individuals, organizations, companies, and governments?
A
Contingent liabilities
B
Current liabilities
C
External liabilities
D
Deferred tax liabilities
Verified step by step guidance1
Understand the concept of liabilities: Liabilities are obligations that a company or country owes to others. They can be classified into different types based on their nature and timing.
Define external liabilities: External liabilities refer to the amount a country owes to foreign individuals, organizations, companies, and governments. These are obligations that arise from international transactions or borrowing.
Differentiate external liabilities from other types: Contingent liabilities are potential obligations that depend on future events, current liabilities are short-term obligations due within a year, and deferred tax liabilities are taxes owed but not yet paid. External liabilities specifically involve foreign entities.
Analyze the options provided: Compare each option to the definition of external liabilities and eliminate those that do not match the description of amounts owed to foreign entities.
Conclude that the correct answer is 'External liabilities' based on the definition and comparison with the other options.
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