Which of the following is a liability?

• A. Office computers
• B. Cash
• C. Mortgage payable for the office building
• D. Intellectual property value

Answer: (C)

In accounting, a liability is a present obligation of the entity to transfer resources in the future, arising from past events. A mortgage payable fits this definition because the business has borrowed funds to purchase the office building and must make future payments of principal and interest to settle that debt. The obligation exists regardless of when the payments are due, and settling it will require resources out of the business.

Office computers and cash are assets because they represent resources the company owns and can use to generate value. Intellectual property value is an intangible asset, representing the value of IP owned by the company, not an obligation to others. Therefore, the mortgage payable is the liability.