Final answer:
Financial assets are liquid assets with a financial claim, easily converted to cash, such as cash reserves, loans, and securities. Non-financial assets are physical or tangible assets used in operations and are not primarily for liquidity purposes, like buildings and equipment. The key difference is liquidity and the function as a store of value.
Step-by-step explanation:
For government accounting purposes, the difference between financial and non-financial assets primarily lies in their ability to be converted into cash or their function as a store of value. Financial assets are assets that represent a financial claim on some other entity, typically including items like cash, bank deposits, loans made by the bank, and securities such as U.S. Treasury bonds. These assets are liquid and can be easily converted into cash. On a bank's balance sheet, these would be listed as part of the bank's reserves or money owed to the bank by others.
Non-financial assets, on the other hand, do not represent a financial claim but are physical or tangible assets that are used in the operations of the bank. These include the bank's buildings, equipment, and any other physical property. While they are assets owned by the bank, they are not as readily convertible to cash and do not have a primary function as a store of value in the same way as financial assets.
In summary, the primary distinction is that financial assets are associated with a claim and are more liquid, while non-financial assets are tangible items that contribute to the productive capacity of the entity.