Final answer:
Restricted fund balances are parts of fund equity that are confined for specific purposes by external constraints or legal requirements. The Safe and Secure Bank's $2 million in reserves can be classified as a restricted fund balance due to reserve requirements. Acme Bank must adjust its balance sheet to maintain the required reserve ratios after purchasing Treasury bonds.
Step-by-step explanation:
The question pertains to the classification of restricted fund balance at the end of the fiscal year. Restricted fund balances are portions of a government entity's fund equity that are legally constrained for a specific future use. In the provided context, if the Safe and Secure Bank is holding $2 million in reserves that are not to be lent out or invested, these funds could be classified as a restricted fund balance because they are set aside to meet the reserve requirement mandated by the Federal Reserve.
In the case of Acme Bank, after the sale of $10 million in Treasury bonds, the balance sheet changes would involve the bank increasing its assets reserves by $10 million and reducing its bond holdings by the same amount. Then, in order to meet the 10% reserve requirement on its deposits, Acme Bank must ensure its reserves are at least $30 million (10% of the $300 million in deposits). If the reserves are insufficient, Acme Bank would have to decrease its loans to boost its reserves to the required level, consequently affecting the fund balance.