Financial Asset
Accounting glossary · Understand, connect, apply
A financial asset includes cash, an equity investment in another entity, and certain contractual rights to receive cash or another financial asset.
Example
When a supplier sells on credit, its contractual right to collect the invoice creates a financial asset.
Remember the difference
An advance payment for supplies generally gives a right to goods rather than cash. Classify the right by what the contract provides.
Browse the accounting glossary · Read the IFRS Foundation reference
Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary