Which GASB54 fund balance classification is for resources restricted to a specific externally imposed purpose?

• A. Nonspendable (inventory, prepaids, not cash)
• B. Restricted (specific purposed externally imposed)
• C. Assigned (specific purpose without board action)
• D. Unassigned (any purpose; general fund)

Answer: (B)

Resources restricted to a specific externally imposed purpose are classified as restricted. This category captures constraints that come from outside the government—such as donor restrictions, grant terms, or laws and regulations from other governments—that limit the use of those funds to a particular purpose. Because the constraint is external, the money isn’t available for any other spending, even if the government decides differently.

Nonspendable items are not spendable in their current form (like inventories or prepaid items). Assigned funds are set aside for a specific purpose by the government’s own decision, but the constraint is internal. Unassigned funds are general-purpose and may be used for any purpose in the general fund. The phrase “externally imposed” is what distinguishes restricted from the other classifications.