In which fund balance category would cash restricted by grant agreements be reported?

• A. Restricted Fund Balance
• B. Committed Fund Balance
• C. Assigned Fund Balance
• D. Unassigned Fund Balance

Answer: (A)

Grant agreements impose externally enforceable limits on how cash may be used, so those funds are reported as restricted fund balance. Because the grantor specifies the allowable purposes (and sometimes time frames), the resources aren’t available for other uses, fitting the restricted category. This differs from committed fund balance, which comes from internal actions by the government’s highest decision-making authority, assigned fund balance, which reflects management’s intent to use funds for a specific purpose, and unassigned fund balance, which represents funds with no constraints in the general fund. Therefore, cash restricted by grant agreements is classified as restricted fund balance.