Which of the following defines liability?

Liability is defined as any claim against the assets of a person or corporation. This concept encompasses obligations or debts that a company or individual is responsible for, meaning that they represent future sacrifices of economic benefits that the entity is obliged to make to settle past transactions or events. This could include loans, accounts payable, mortgages, or any other financial obligations that are expected to require payment in the future.

Understanding this definition is crucial in financial contexts, as liabilities play a vital role in determining the financial health and stability of both individuals and corporations. By recognizing liabilities, stakeholders can assess the risk and obligations associated with financial decisions. In contrast, the other provided options relate to different financial concepts, such as assets, investments, or retirement funds, which do not define liability itself.