Which of the following best describes liabilities and stockholders' equity?

A) They are the sources of financing an entity's assets.
B) They are the economic resources owned by a business entity
C) They are reported on the income statement.
D) They both increase when assets increase.

Liabilities

Liabilities are the financial obligations of a company, including debts and other amounts owed to creditors, which must be settled over time.

Stockholders' Equity

Stockholders' equity represents the residual interest in the assets of a corporation after deducting liabilities, essentially what is owned by the company's shareholders.