What are liabilities in accounting?

Liabilities in accounting are defined as amounts owed by an entity to others. This encompasses any financial obligations that a company has to pay debts, which can include loans, accounts payable, mortgages, and any other amounts due. Understanding liabilities is crucial in accounting because they represent a claim against the company's assets and affect the overall financial health of the business.

In contrast, assets refer to what the company owns, which makes option A incorrect. Sales made on credit pertain to revenue generation, not liabilities, so they are not affirmative in defining liabilities, thus ruling out option C. Lastly, investments in other companies represent assets and do not convey the concept of an obligation, making option D also incorrect. By recognizing liabilities as obligations, one can assess a company's financial position and performance effectively.