Restricted Cash

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What is 'Restricted Cash'

Restricted cash consists of monies earmarked for a specific purpose and therefore not available for immediate and general use by an organization. Restricted cash, if the amount is material, is shown separately from cash and equivalents on the balance sheet. The purpose for which the cash is restricted is generally disclosed in the notes to the financial statements.

BREAKING DOWN 'Restricted Cash'

Restricted cash can be designated for a range of purposes such as loan repayment, equipment purchase or investments. It may be classified as a current or non-current asset, depending on when it is expected to be used. Expected usage of restricted cash within one year of the balance sheet date would necessitate it to be classified as a current asset; expected usage more than a year out would require it to be classified as a non-current or long-term asset.

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