Which category of financial instrument includes cash and receivables?

Financial assets encompass cash and receivables, making this category the correct answer. Financial assets represent resources owned by an entity that are expected to generate economic benefits in the future. Cash is the most liquid asset and serves as a primary means of transaction. Receivables, on the other hand, indicate amounts owed to the entity by customers or other parties, often resulting from credit sales. Both cash and receivables ultimately contribute to the liquidity and operational capacity of a business.

In contrast, financial liabilities refer to obligations that an entity owes to external parties, such as loans or accounts payable, and thus do not include cash or receivables. Equity instruments cover ownership interests in a company, representing share capital and retained earnings, while intangible assets include non-physical items such as patents and trademarks. Therefore, neither of these categories relates to cash or receivables. Intangible assets also lack the direct cash benefits provided by cash and receivables, further emphasizing the importance of correctly identifying financial assets as the category that encompasses these items.