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CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br /> <br /> <br /> <br />(20) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />L. Net Position/Fund Balance (Continued) <br /> <br />Committed – funds are established and modified by a resolution approved by the <br />City Council. <br />Assigned – consists of internally imposed constraints approved by the City Finance <br />Director. <br />Unassigned – is the residual classification for the General Fund and also reflects the <br />negative residual amounts in other funds. <br /> <br />When an expenditure is incurred for purposes for which both restricted and unrestricted <br />fund balance is available, it is the City’s policy to use restricted first, then unrestricted <br />fund balance. <br /> <br />When an expenditure is incurred for purposes for which committed, assigned and <br />unassigned amounts are available, it is the City’s policy to use committed first, then <br />assigned, and finally unassigned amounts. <br /> <br />M. Interfund Transactions <br /> <br />Interfund services provided and used are accounted for as revenues, expenditures or <br />expenses. Transactions that constitute reimbursements to a fund for expenditures/ <br />expenses initially made from it that are properly applicable to another fund, are recorded <br />as expenditures/expenses in the reimbursing fund and as reductions of expenditures or <br />expenses in the fund that is reimbursed. All other interfund transactions are reported as <br />transfers. <br /> <br />All interfund transactions are eliminated except for activity between governmental <br />activities and business-type activities for presentation in the entity-wide statements of <br />net position and statements of activities. <br /> <br /> <br />NOTE 2 DEPOSITS AND INVESTMENTS <br />A. Deposits <br /> <br />The City maintains a cash and investment pool that is available for use by all funds. <br />Each fund type’s portion of this pool is displayed on the statement of net position and the <br />balance sheet as “Cash and Investments.” In accordance with Minnesota Statutes, the <br />City maintains deposits at financial institutions which are authorized by the City Council.