Susannah purchased a new phone plan with a two-year total contract cost of $1,200. They paid $300 upfront and financed the rest in equal monthly payments. They also pay $50 per month for a data plan and $10 for an insurance plan. What is the liability in this scenario?

A liability is an amount owed. Susannah paid $300 upfront on the $1,200 contract, leaving $1,200 − $300 = $900 to finance. That financed amount is the liability; the monthly data and insurance charges are ongoing costs.

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