What is an example of restricted cash?

For example, a company may hold restricted cash for the purpose of making a large capital expenditure, such as a factory upgrade, but later decide against making the expenditure. The cash designated as restricted for that purpose is then freed up for the company to spend or invest elsewhere.

What is restricted cash accounting?

When it comes to accounting for restricted cash, the primary objective is to ensure transparency and accuracy in financial reporting. Companies must clearly distinguish between restricted and unrestricted cash to provide a true picture of their liquidity.

What is restricted cash on a cash flow statement?

It allows a balance sheet to balance until the cash is brought in as revenue or paid out as an expense and accounted for normally. Restricted cash on the cash flow statement is another form of financial statement that a corporation uses to account for such cash and keep its accounts balanced.