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CITY OF ARDEN IIILLS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 3 I, 2002 I Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when eamed and expenses are recorded at the time liabilities are incurred. In accordance with the provisions of the GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Frmds and other Governmental Entities that use Proprietary Fund Account, the City applies all applicable GASB pronotillCements plus all Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board opinions, and Accounting Research Bulletins issued on or before November 30, 1989, except for those that conflict with or contradict GASB pronouncements. The City has elected not to apply FASB Statements and Interpretations issued after November 30, 1989. Proprietary funds include the following fund type: .1 I Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED I I Enterprise funds and used to account for those operations that are financed and operated in a manner similar to private business or where the Council has decided that the determination of revenues eanled, costs incurred and/or net income is necessary for management accountability. I Account groups. The general fixed assets account group is used to account for fixed assets not accounted for in proprietary funds. The general long-term debt account group is used to account for general long-term debt and certain other liabilities that are not specific liabilities of proprietary funds. I C. Assets, Liabilities and Equity I Deposits and Investments I The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. -. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. I Millllesota statutes authorize the City to invest in obligations oftlle U.S. Treasury, corrrrnercial paper, corporate bonds, repurchase agreements and shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are obligations guaranteed by the United States or its agencies. I Investments for the City are reported at fair value. The Minnesota Municipal Money Market Fund investment pool operates in accordance with appropriate State laws and regulations. The reported value ofthe pool is the same as the fair value of the pool shares. I I I I .' I -13- I