What term is used to describe the obligations or debts a business owes to creditors?

The term that describes the obligations or debts a business owes to creditors is liabilities. Liabilities are a crucial aspect of financial accounting and represent the claims against a company’s assets. When a company borrows money, incurs expenses that have yet to be paid, or issues bonds, these obligations are recorded as liabilities on the balance sheet.

Assets, on the other hand, represent what the company owns, such as cash, inventory, and property. Equities refer to the owner's claims on the business after all liabilities have been settled, essentially reflecting the shareholders' investment in the company. Reserves are portions of a company's earnings that have been retained for future use and do not directly reflect obligations to creditors. Thus, liabilities specifically denote what a company owes and are fundamental in assessing financial health and solvency.