What are liabilities?

Liabilities are things you owe to other people or groups.

Imagine you're playing with your friends, and you borrow a toy from one of them. That toy is like something you have, but you also have to remember that you need to give it back sometime, that’s like having a liability. It's not something bad; it's just a promise or an agreement.

Let’s say your mom gives you 10 cookies, and you eat 3 of them right away. Now, you still have 7 cookies left, but you also owe your brother 5 cookies because you promised to share. Those 5 cookies you owe are your liabilities, even though you still have some cookies in your hand.

Think about when you borrow money from a friend to buy a new game. You’re happy with the game, but now you have to remember that you need to pay them back, that’s also a liability. It's like having something fun, but also having a little reminder that you still need to do something else.

So liabilities are just things you owe, and they help keep track of what you need to give back later!