Rupert Inc. reports the following selected information (in thousands) in its April 30, 2015, financial statements:

2015 2014

Cash and cash equivalents.............$41,817......$31,525

Restricted cash.....................................5,350.........3,100

Additional information: Restricted cash represents monies held for a potential lawsuit settlement.

Instructions

(a) Explain the difference between cash and cash equivalents. Why are they combined for reporting purposes?

(b) In which section of the statement of financial position would the restricted cash most likely be reported? Explain.

(c) Explain why it is necessary to report restricted cash separately when cash equivalents, such as highly liquid trading investments, are included in cash.