Which statement describes a company’s liabilities?

Liabilities represent the debts and obligations that a company owes to external parties. This includes various forms of financial responsibilities, such as loans, accounts payable, mortgages, and any other commitments that the business must fulfill in the future. In accounting, liabilities are classified as either current or long-term, depending on when they are due. Current liabilities are expected to be settled within one year, while long-term liabilities extend beyond that timeframe. Understanding liabilities is crucial for assessing a company’s financial health, as they indicate the resources it is obligated to pay back, and help in determining the overall net worth of the business.

The other statements do not accurately describe liabilities. The notion that liabilities represent the owner's equity contradicts the fundamental accounting equation, where liabilities are separate from owners’ equity. Additionally, stating that liabilities consist only of short-term financial obligations excludes many significant long-term debts that are part of a company's liabilities. Finally, including all income generated from sales as liabilities is inaccurate, as income is accounted for differently under revenues, and does not reflect an obligation to pay anyone. Therefore, option B clearly delineates liabilities as the financial obligations that a company owes to others, making it the correct choice.