when companies report their financial statements unrestricted cash must be listed in the cash and cash equivalents line item of a company s balance sheet 
unrestricted cash vs restricted cashrestricted cash is cash held by a company that is not readily available to be spent or used by the company cash might be restricted if the money is required to be held aside to secure a bank loan or credit facility sometimes financial institutions impose credit covenants which include requirements and restrictions the cash pledged as collateral for a loan helps protect the bank in the event the company goes bankrupt or defaults on the loan restricted cash is typically listed as a separate line item on the balance sheet the description or details explaining why the cash is restricted is usually found in the notes section of a company s financial statements if the restricted cash is for a short term pledge meaning it s due to expire in less than one year the line item would be located under current assets however if the restricted cash must be held for more than one year it would be listed under long term assets called noncurrent assets conversely unrestricted cash is listed as a current asset and can be used for any purpose since it has not been pledged to secure an obligation example of unrestricted cashfor example xyz corporation manufactures machinery and borrowed 1 million from the local bank the bank required a debt covenant in which xyz must hold 400 000 in cash on hand at all times below is a portion of the balance sheet for xyz corporation despite 400 000 being held as restricted cash xyz has more than enough unrestricted cash to cover the 300 000 in accounts payable money owed to suppliers and 100 000 in short term debt obligations 