Which term is best defined as the funds a business must pay off to others?

The term that best defines the funds a business must pay off to others is "liabilities." In accounting, liabilities are obligations that a company has to settle in the future, typically arising from past transactions or events. They can include loans, accounts payable, mortgages, and other debts. Liabilities represent the company's debts and financial obligations that it needs to fulfill, which is crucial for assessing the company's financial health.

Assets, on the other hand, refer to resources owned by the business that have economic value. Equity represents the ownership value in the business after subtracting liabilities from assets, essentially showing the residual interest of the owners. Net income is the total revenue minus total expenses, reflecting a company's profitability over a certain period; it does not directly relate to the obligations to pay off debts. Thus, liabilities specifically encapsulate the financial commitments that a business must address, making it the correct term for the definition provided.