What term describes financial obligations, both long and short-term?

The term that describes financial obligations, both long and short-term, is indeed liabilities. In the context of finance and accounting, liabilities refer to the debts and obligations that a company or individual owes to others. This includes loans, credit balances, mortgages, and other financial commitments that require future outflows of resources.

Understanding liabilities is essential because they provide insight into the financial health of an entity. They are typically categorized as either current liabilities, which are expected to be settled within one year, or long-term liabilities, which are due beyond a year. This classification helps stakeholders assess the risk and timing of financial obligations.

Capital refers more to the wealth used to fund a business, while assets represent what a company owns outright, including cash and property. Equity represents the ownership value remaining after all liabilities have been subtracted from assets, embodying the net value for shareholders. Thus, liabilities distinctly relate to financial obligations, making them the appropriate choice for this question.