FAR 2: Section 5 - Financial Reporting and Changing Prices

Question 1

What are monetary items?

Answer 1

1. Assets and liabilities that are fixed in amount by contract or in terms of number of dollars.
2. Examples include cash, accounts, and note receivables, and accounts and notes payable.
3. These items are already stated in constant dollar.

Question 2

what are non-monetary items?

Answer 2

1. Assets and liabilities that fluctuate in value with inflation / deflation.
2. Examples are inventories, property, plant and equipment, and capital stock. These items need to be rested to constant dollar.