In accounting, what does the term "liabilities" refer to?

The term "liabilities" in accounting specifically refers to obligations or debts that a company owes to outside parties. This includes loans, accounts payable, and other financial commitments that the business must settle in the future. Liabilities represent future sacrifices of economic benefits that the entity is obligated to provide due to past transactions or events.

Understanding liabilities is crucial for assessing a company’s financial health, as they are a key component of the balance sheet. Liabilities are typically categorized into current liabilities, which are due within one year, and long-term liabilities, which are due beyond one year. This categorization helps stakeholders evaluate the timing and impact of these obligations on the company's cash flow and overall financial position.

The other options do not accurately define liabilities. Cash and cash equivalents are assets, resources generated from sales relate to revenues or income, and investments made by stockholders are part of equity, not liabilities. Each of these concepts plays a different role in financial accounting, contributing to a comprehensive understanding of a company's overall financial structure.