Which of the following asset amounts would be classified as restricted fund balance on the governmental funds balance sheet?

• A. Cash Related to a Federal Grant for the Public Works Department.
• B. Cash Restricted for a Debt Service Fund.
• C. Cash in a Capital Project Restricted for a Specific Grant.
• D. Accounts Receivable from a Grant.

Answer: (A)

In governmental funds, restricted fund balance consists of resources that are subject to externally imposed constraints on their use. A federal grant that is limited to fund a specific purpose for the Public Works Department creates a binding external constraint on that cash, so it would be classified as restricted fund balance on the governmental funds balance sheet.

Cash restricted for a debt service fund and cash in a capital project restricted for a specific grant are restricted within their respective funds, but they are not reported as restricted fund balance in the general sense on the governmental funds balance sheet; they belong to the restricted assets of those specific funds. An accounts receivable from a grant is an asset, not cash, and it is not reported as restricted fund balance.