Which GASB54 fund balance classification includes inventory and prepaid items (not cash)?

• A. Nonspendable (inventory, prepaids, not cash)
• B. Restricted (specific purposed externally imposed)
• C. Assigned (specific purpose without board action)
• D. Committed (set aside by board for specific purpose)

Answer: (A)

In GASB 54, fund balance is categorized to show what portion is available for spending versus what must be preserved. Nonspendable includes amounts that cannot be spent in their current form, such as inventory and prepaid items, because they are not cash and will be consumed or converted to cash in the future. Since these assets aren’t yet available for appropriation, they sit in the nonspendable category. The other classifications describe resources with various constraints or intentions for use (restricted by external limits, assigned to a specific purpose, or committed by formal action), but they apply to spendable resources rather than items that aren’t yet consumable.