This article covers a number of issues relating to the accounting of financial instruments under FRS 102, including Section 22 Liabilities and Equity, Section 11 Basic Financial Instruments and Section 12 Other Financial Instruments Issues.

But first it is important to define what FRS 102 considers to be a financial instrument; the standard itself sets out very specific definitions, which are somewhat overwhelming. A one sentence summary is that an entity has a financial liability if it has a contractual obligation to pay out cash or something like cash; it has a financial asset if it has a contractual right to receive cash or something like it.