The so-called derivative refers to things derived from the original things. Financial derivatives refer to the transaction forms derived from the traditional financial business in the past.

Non-derivative financial assets are also non-derivative financial instruments Including currency, bonds, convertible bonds and so on.

In real life, financial instruments can be seen everywhere. For example, you can easily think of investment instruments such as bonds or stocks in the market, and you may even think of the investment risks of financial instruments or being "trapped". However, it is necessary to define financial instruments from the perspective of accounting standards for financial instruments. It is precisely because people easily associate the word financial instruments with stock or bond investment when they see it, so some people once simply defined financial instruments as some financial assets held by enterprises. In fact, if you are on the side of the issuer of financial instruments, when the holder of financial instruments is assets, the issuer is often the equity listed in liabilities or owners' equity. A commercial banks issue bonds, and B insurance companies buy bonds. For A commercial bank, bonds are liabilities, but for B insurance company, they are bond investments (financial assets). Thus, from the perspective of accounting standards, financial instruments refer to contracts that form financial assets of enterprises and financial liabilities or equity instruments of other units. Why is the definition of financial instruments based on "contract"? This is because the initial existence of financial instruments inevitably involves the issuer and the receiver, and the two parties reach a transaction in the form of a contract, and the termination point of this contract is precisely the time when the corresponding financial instrument "dies". According to the above definition of financial instruments, they can be roughly divided into two categories: one is basic financial instruments, and the other is derivative financial instruments.

Let me talk about basic financial instruments first. Money (cash) is a basic financial tool, and it is also a financial asset for the holder. It stands for the medium of exchange and can be simply understood as a contract between the holder and the government (issuer). Deposits in banks or similar financial institutions are also basic financial instruments (assets), which represent a contractual right of depositors, that is, depositors have the right to obtain cash from the institutions, or to issue checks or similar instruments to pay financial liabilities according to their deposit balance. Secondly, we can also find the basic financial instruments that appear in pairs, such as accounts receivable and accounts payable, bills receivable and bills payable, bonds receivable and bonds payable, other accounts receivable and other accounts payable, long-term equity investment and equity. In addition, some basic financial instruments will be difficult to judge. For example, are financial leasing and operating leasing basic financial instruments? The financial lease contract is basically regarded as the lessor's right to obtain continuous income and the lessee's obligation to pay continuously. This series of payments is essentially the same as the combined payment of principal and interest under the loan agreement: the lessor accounts for the investment of receivables in the lease contract, not the leased assets themselves. Operating leases are somewhat different. Basically regarded as an unfinished contract, the lessor is required to provide assets to the lessee for future use in exchange for similar labor costs. The lessor continues to explain its leased assets. Therefore, financial leasing is considered as a financial instrument, while operating leasing is not a financial instrument (except due receivables or payables). For another example, is financial guarantee a financial instrument? It represents a contractual right of the lender to collect cash from the guarantor, and it is also a corresponding contractual obligation of the guarantor to pay cash to the lender when the borrower defaults. The contractual rights and obligations exist because of past transactions or events (as a guarantee). Even if the lender can exercise this right, whether the guarantor must fulfill this obligation depends on whether the borrower defaults in the future. Thus, financial guarantee is also a financial tool.