Liquid Clay comes in many forms, but many of us just refer to all brands as TLS, which actually stands for "Translucent Liquid Sculpey". In actuality, Sculpey certainly isn't the only one who makes Liquid Clay. Fimo makes a Liquid Clay called "Fimo Decorating Gel", and Kato makes a Liquid Clay called "Clear Liquid Polyclay".
From my experience, you can use a WIDE variety of things with your Liquid Clay. If you want it to be Translucent though, I suggest using Fimo Decorating Gel. It is EXTREMELY translucent and makes the BEST sauces and syrups and anything else that needs to be coloured but still still transparent. TLS will leave you with an opaque mixture, so it's good for things that don't need to be see-through like chocolate sauce, slime, blood, icing, etc.
For colouring, things like Oil Paints, shaved Oil Pastels, Chalk Pastel/Charcoal, Kneaded Polymer Clay, Eyeshadow, Metallic Powders, Alcohol-Based Ink, Dry Pigment Powder, etc...
DON'T use Acrylic Paint. It does BAD things when