Question

Explain the difference between monetary and nonmonetary assets and liabilities. Please answer in your own words....

Explain the difference between monetary and nonmonetary assets and liabilities. Please answer in your own words. Do not use outside resources.

Homework Answers

Answer #1

Monetary assets are assets which have a pre-determined cash value i.e., a fixed and constant amount that can be received when they are liquidated. These assets are also fairly easy to liquidate.

Examples of monetary assets include:

Cash balance

Bank balance

Fixed deposits

Accounts receivable

Notes receivable

Non-monetary assets are assets whose cash value is not pre-determined at a fixed amount and can change significantly over time. These assets are also tougher to liquidate.

Examples of non-monetary assets include:

  • Market investments
  • Manufacturing fixed assets such as plant and machinery
  • Property
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