What classification of fund balances includes resources constitutionally limited as to use?

The classification of fund balances that includes resources constitutionally limited as to use is indeed restricted. This distinction is important because restricted fund balances represent funds that are set aside for a specific purpose as dictated by external sources, which may include federal regulations, state laws, or agreements. This ensures that the resources are utilized in accordance with the stipulated legal or contractual obligations.

Restricted fund balances differ from other classifications in that they have specific limitations placed upon their use, preventing the entity from using those funds for general purpose expenditures. Entities often report these restrictions in their financial statements to provide transparency regarding how the funds can be utilized and to whom they are accountable.

In contrast, options like committed fund balances are internally established by the governing body for a specific purpose but can be changed or revoked easily. Assigned fund balances are intended for specific uses but are less formal than commitments, often being established by management rather than by a governing body. Unassigned balances are the portion of fund balance that is available for any purpose, providing the most flexibility. Understanding these classifications helps stakeholders assess the financial decision-making and resource management practices of governmental entities.