Misconception · MIS:ownership-makes-compensating-balance-unrestricted

Mistaken idea “Ownership makes a compensating balance unrestricted cash”

Mistaken reasoning: This mistake ignores a withdrawal restriction because the borrower still owns the deposit.

Updated Sep 11, 2026 Review due Dec 11, 2026

Why this is mistaken

Ownership and availability answer different questions. Preserve the deposit as an asset, but present and disclose the supported restriction. Use the cash the borrower can deploy when explaining the arrangement's simple effective cost.

Where to watch

When this mistake may appear

  • The deposit remains the borrower's asset.
Check your work

Your work may contain this mistake if:

  • Includes a legally restricted loan deposit in cash available for general use.