Course Outline
Join PRO

Where should a business report cash which is restricted to purchase a long-term asset?

Author:
Harold Averkamp, CPA, MBA

The cash which a business has restricted to purchase a long-term asset should be reported on the balance sheet under the asset heading Investments. Investments is the first of the long-term asset headings and it is positioned immediately after current assets.

The cash restricted for a long-term asset is not reported as part of the company’s current assets because the cash is not available to pay current liabilities. Expressed another way, when the business restricts its cash for the purchase of a long-term asset, the business must reduce the amount it reports as working capital (which is current assets minus current liabilities).

Join PRO to Track Progress

Features

Free

PRO

Lifetime Access (One-Time Fee)
Explanations
Quizzes
Q&A
Dictionary
Bookkeeping Video Training
Financial Statements Video Training
Visual Tutorials
Quick Tests
Quick Tests with Coaching
Cheat Sheets
Flashcards
Crossword Puzzles
Word Scrambles with Coaching
Bookkeeping Study Guide
Managerial and Cost Accounting Study Guide
Certificates of Achievement
Bookkeeping Certificate of Excellence
Business Forms
Printable PDF Files
Progress Tracking
Motivational Badges and Points
Motivational Medal Rankings
Motivational Activity Streaks
Public Profile Page of Achievements

About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

Read 3,033 Testimonials

PRO for Teams
  • Easily onboard new users and team admins
  • Monitor individual user progress and grades
  • Monitor team progress and compare users
  • View average grades and find problem areas
  • Monitor recent activity and user achievements
PRO for Teams
Take the Tour Join Pro Upgrade to Pro