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Financial instruments

What are financial instruments?

1.1 Definitions of financial instruments

‘A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument in another entity.’ (IAS 32 para 11)

Still not sure what a financial instrument actually is?

Think of them as anything that is used in financing a business. e.g.
loans, shares

Anything that is used in
Anything that is used in

PROVIDING finance = OBTAINING finance =
FINANCIAL LIABILITY
FINANCIAL ASSET
OR EQUITY

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