What are "monetary items" according to financial reporting?

Monetary items in financial reporting refer to assets and liabilities that represent a claim to receive or an obligation to pay a fixed amount of monetary currency. Option C accurately describes this concept by highlighting that monetary items include units of currency and assets or liabilities to be settled in fixed currency units. This definition aligns with the standards of financial reporting, which categorize these items as having a fixed value in terms of currency, making them susceptible to changes in purchasing power and exchange rates.

In the context of financial reporting, it’s critical to distinguish monetary items from non-monetary items, which do not have a fixed dollar value, such as inventory or property, plant, and equipment. Monetary items maintain their value in the currency that they are denominated in and are considered critical for assessing a company's liquidity. Understanding this distinction is essential for effective financial analysis and reporting.