Which of the following is NOT one of the five categories of fund balances?

The correct answer is that "Liquid" is not one of the five categories of fund balances as defined by governmental accounting standards. The five recognized categories of fund balances are Non-spendable, Restricted, Committed, Assigned, and Unassigned.

Non-spendable fund balances refer to amounts that are not in a spendable form, such as inventories or prepaid expenses. Restricted fund balances are constrained for specific purposes as stipulated by external parties or legislation. Committed fund balances are those amounts that are constrained by the government’s own formal actions, typically through resolutions or ordinances. Assigned fund balances are intended for specific purposes but are not formally restricted, while Unassigned fund balances represent amounts that are available for any purpose and not designated for any specific future use.

"Liquid" is not a recognized category of fund balance; rather, it may refer to the nature of assets or other financial metrics but does not fit into the specific classification of fund balances used in governmental accounting. Understanding these categories is crucial for accurate financial reporting and ensuring transparency in governmental financial practices.