Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

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Prepare for the Texas Real Estate SAE Exam with our educational quiz. Study using flashcards and multiple choice questions, each with detailed explanations to ensure you're ready to pass your exam!

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Which phrase best describes liabilities?

  1. Current income sources

  2. All debts owed by an individual or business

  3. Future potential earnings

  4. Assets that can be liquidated

The correct answer is: All debts owed by an individual or business

Liabilities are best described as all debts owed by an individual or business. This definition encompasses various financial obligations, including loans, unpaid bills, mortgages, bonds payable, and any other form of debt that requires settlement in the future. When assessing the financial health of a business or individual, understanding liabilities is crucial, as they directly impact net worth and overall financial positioning. Current income sources would refer to revenue streams rather than obligations. Future potential earnings relate to expected income, which again does not pertain to debts owed. While assets can indeed be liquidated, indicating their potential to convert to cash, they are not liabilities themselves. Liabilities specifically represent what is owed and must be managed carefully to maintain financial stability.

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