Which One of the Following Is a Liability

question 3

Multiple Choice

Which one of the following is a liability?

• A)Interest receivable.
• B)Contributed capital.
• C)Retained earnings.
• D)Wages payable.

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Definitions:

Moral Hazard

The situation where one party to an agreement can take risks because the negative consequences of the risk will be borne by another party.

Insurance

A financial product that provides protection against potential loss, transferring risk from an individual or entity to an insurer.

Moral Hazard

The situation where one party takes more risks because they know they are protected, typically through insurance or other safety nets, leading to potential loss for the other party.

Financial Crisis

A situation where the value of financial institutions or assets drops rapidly, leading to a loss of confidence in the financial system, possible bank runs, and reduced lending and spending.