Which term describes the amount a company owes to its creditors?

The term that describes the amount a company owes to its creditors is liabilities. In financial accounting, liabilities are defined as obligations that a company has to settle in the future, usually by transferring economic benefits such as cash, goods, or services to other entities. These obligations stem from past transactions or events, such as borrowing money, purchasing goods on credit, or incurring expenses that have not yet been paid.

Liabilities are a key component of a company's balance sheet and are classified into current liabilities (due within one year) and long-term liabilities (due after one year). Understanding liabilities is critical for assessing a company's financial health, as they represent claims against the company's assets.

Other terms like assets, equity, and goodwill refer to different financial concepts. Assets represent what the company owns, equity reflects the owners' interest in the company after liabilities are deducted from assets, and goodwill is an intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets. Each of these terms serves a distinct purpose within financial statements and does not accurately describe the amounts owed to creditors.