What does nonspendable fund balance primarily include?

The nonspendable fund balance primarily includes assets that are not expected to be converted to cash or that are legally or contractually required to remain intact. This includes the long-term portion of loans receivable, as these represent amounts owed to the entity that will not be realized in the short term and are not available for immediate spending.

Nonspendable fund balances are a critical component of the overall fund balance, indicating the resources that are effectively locked in either because they are tied to long-term receivables or because they represent inventories or prepayments. Including the long-term portion of loans receivable in the nonspendable category highlights that these resources cannot be used for other expenses until they are collected, thus providing clear guidance for financial management and budgeting purposes.

The other options, while they may involve funds or resources, do not specifically fall under the nonspendable category as defined by accounting standards. Imposed constraints on expenditures refer to restrictions that may be temporary or discretionary. Pending grant revenues, on the other hand, imply that those funds are expected to be available once the conditions of the grant are met, meaning they can potentially be spent in the near future. Lastly, short-term cash reserves are generally considered available for immediate use,