What is the difference between fund balance and cash on hand?

What is the difference between fund balance and cash on hand?

• A. Fund balance is the residual of assets minus liabilities in a fund, unrestricted or restricted; cash on hand is the immediate liquidity.
• B. Fund balance equals cash on hand.
• C. Cash on hand equals restricted funds.
• D. Fund balance is a liability.

Answer: (A)

Fund balance is the net resources in a fund, calculated as assets minus liabilities, and it can be unrestricted or restricted for specific purposes. It represents what the fund has left to use after honoring its obligations, not just cash. Cash on hand is the actual cash that is immediately available to spend. They differ because fund balance includes noncash assets (like receivables or investments) and outstanding obligations, while cash on hand is purely the liquid cash currently available. Some of the fund balance may be restricted by donors or grant terms, but fund balance as a whole is not a liability; it’s the remaining net resources of the fund.

Fund balance is the net resources in a fund, calculated as assets minus liabilities, and it can be unrestricted or restricted for specific purposes. It represents what the fund has left to use after honoring its obligations, not just cash. Cash on hand is the actual cash that is immediately available to spend. They differ because fund balance includes noncash assets (like receivables or investments) and outstanding obligations, while cash on hand is purely the liquid cash currently available. Some of the fund balance may be restricted by donors or grant terms, but fund balance as a whole is not a liability; it’s the remaining net resources of the fund.