In the case of restricted cash, which of the following is considered a common example?

Restricted cash refers to cash that is set aside for a specific purpose and is not available for general use. An example of this type of cash is deposits requiring a minimum balance, as these funds are often held in reserve and may be restricted in their use based on contractual agreements or regulatory requirements.

When a business has deposits earmarked for certain obligations or to meet specific conditions set by a financial institution, such as maintaining a minimum balance in a bank account, those funds are considered restricted. This means they cannot be used for regular operational expenses or other purposes until the conditions are fulfilled, which illustrates the concept of restricted cash effectively.

In contrast, public shares, deductions for future donations, and foreign currency do not typically represent cash that is restricted for specific use; they are either assets that can be converted into cash without restrictions (like public shares and foreign currency) or represent future commitments that do not involve cash flow at the moment (like deductions). Therefore, deposits requiring minimum balance serve as a clear and relevant example of restricted cash in practice.