ACCA Strategic Business Reporting (SBR) Practice Exam

What types of items are included in the statement of financial position when referring to non-monetary items?

1. Only cash and cash equivalents

2. Current liabilities and assets

3. Inventories and investments

4. Intangible assets only

The correct answer is: Inventories and investments

Non-monetary items in the statement of financial position are those not directly tied to cash or cash equivalents but hold value in the form of physical or intangible forms. The correct answer, which includes inventories and investments, highlights essential non-monetary assets companies commonly report. Inventories represent goods available for sale and thus form a vital part of a company’s operational capability. Investments, which can be in the form of stocks, bonds, or long-term assets, also indicate the financial resources at a company’s disposal for future growth and income generation. In contrast, the other choices focus on categories that do not fully encompass the broader definition of non-monetary items. Cash and cash equivalents are monetary assets themselves, while current liabilities and assets predominantly involve transactions expected to occur within a year, mixing both monetary and non-monetary items. Lastly, intangible assets alone, while a significant category of non-monetary assets, do not reflect the breadth of non-monetary items that can include inventories and investments. Thus, focusing on inventories and investments accurately captures a wider array of non-monetary items on the statement of financial position.