cheques, postal orders) and/or physical cash (notes and coins) - is a financial asset. • For an asset to be a financial asset, the transaction must be settled through the receipt of cash or another financial asset and not through the receipt of goods or services. Paragraph 2.1, and AG2.1 What is the definition of a financial liability? The core principle in IAS 36 is that an asset must not be carried in the financial statements at more than the highest amount to be recovered through its use or sale. If the carrying amount exceeds the recoverable amount, the asset is described as impaired. The entity must reduce the carrying amount of the asset to its recoverable amount, and Working capital is a measure of both a company's efficiency and its short-term financial health . Working capital is calculated as: Short term is a concept that refers to holding an asset for a year or less, and accountants use the term “current” to refer to an asset expected to be converted into cash in the next year or a Financial assets are more liquid than tangible assets, i.e. they can be turned into cash more rapidly. While land or some other tangible asset has physical value, a financial document does not until it is converted into cash. Types of financial assets. Certificate of deposit (CD) This is a common type of financial asset. With a CD, the investor Derivatives may be financial assets and liabilities (e.g., interest rate swaps) or nonfinancial assets and liabilities (e.g., commodity contracts). This chapter discusses all derivatives, as the process to determine a valuation is generally the same whether a derivative is a financial or nonfinancial instrument. Financial assets refer to intangible assets with monetary value, typically represented by legal ownership or a contractual claim. These assets can include stocks, bonds, cash and cash equivalents, and alternative investments. Financial assets are highly liquid, meaning they can be readily converted into cash. Exhibits 1 and 2 compare three financial reporting alternatives. For a cash basis, a statement of assets and liabilities would include only cash and owners’ equity, while the statement of revenues, expenses, and retained earnings would include revenue from cash sales and revenue from cash collected from credit sales of prior years reduced by all cash expenditures, including capital expenditures. .

is cash a financial asset