Which of the following best describes a mortgage?

A mortgage is best described as a liability owed to a bank because it represents a loan taken out for the purpose of purchasing real estate. When a borrower takes out a mortgage, they agree to repay the lender, usually a bank, over a specified period with interest. This obligation to repay the borrowed amount classifies the mortgage as a liability on the borrower's balance sheet.

In this context, the other choices do not capture the essence of what a mortgage is. Equity refers to ownership in an asset after subtracting liabilities, thus it does not describe a mortgage itself. A mortgage is not a financial statement; instead, it can be reflected in financial statements as a liability. Lastly, a mortgage does not measure financial performance; rather, it is an obligation that affects financial health and risk.