Which of the following best describes the term 'liabilities' in financial statements?

The term 'liabilities' in financial statements refers to claims against the company’s assets. This definition highlights the obligation of the company to settle debts and financial responsibilities that arise from past transactions or events. Liabilities represent the amounts that the company owes to external parties, which may include loans, payables to suppliers, or other financial obligations.

When identifying liabilities on the balance sheet, they are typically categorized into current liabilities (due within one year) and non-current liabilities (due after one year). Understanding liabilities is crucial for assessing a company's financial health, as they indicate how much of the company's assets are financed through borrowing instead of equity.

The other choices do not accurately reflect the definition of liabilities. Investments made by the owners pertain to equity, income earned from operations relates to revenues, and the total value of all assets describes a measure of the company's resources rather than its obligations.