What can be considered as a financial liability?

A financial liability represents an obligation that a company owes to outside parties, which can take the form of loans, accounts payable, or other debts that require future payment.

Accounts payable fits this definition perfectly as it refers to the amount a company owes to its suppliers for goods and services received but not yet paid for. It represents a clear obligation that the business is required to settle in the near future, thus categorizing it as a liability on the balance sheet.

On the other hand, cash on hand is an asset, as it indicates financial resources available to the company. Inventory represents goods that are available for sale, also classified as an asset. Future income is not a liability but rather potential revenue that has yet to be realized and does not signify any current obligation.