Financial asset
A financial asset includes cash, an equity instrument of another entity, and specified contractual rights such as rights to receive cash or exchange financial instruments on potentially favourable terms. The applicable standards contain the full definition and requirements. Auditors evaluate rights, classification, measurement and disclosures.
Worked example
A lender’s contractual right to receive loan repayments is a financial asset; the auditor examines the agreement and relevant measurement.
Common mistake
Do not limit financial assets to receivables: cash and qualifying holdings of another entity’s equity also fall within the definition.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |