Compensating balances are a restriction on the use of a company's cash and should be
A) reported as a current asset.
B) reported as a noncurrent asset.
C) disclosed in the financial statements.
D) reported as a reduction of cash.

Question

Quizplus · Accepted Answer

Compensating balances are a restriction on the use of a company's cash and should be disclosed in the financial statements. While they may impact a company's liquidity, they are not reported as an asset or a reduction of cash.

Compensating Balances Are a Restriction on the Use of a Company's