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CITY CE GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL: STATEMENTS DECEMBER 31, 2011 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PoL.ICIES (CONTINUED) B. Basic Financial Statements (Continued) �. Fund Financial. Statements (Continued) The City reports the following major proprietary fund: Sewer Fund — The sewer fund accounts for customer sewer service charges that are used to finance sewer operating expenses. C. Measurement. Focus acid Basis of Accounting The government -wide and proprietary fund financial statements. are reported using the economic. resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability` is incurred, regardless of the. timing of related cash flows. Property taxes are recognized as revenues in the year far which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been rriet. Private -sector standards of accounting and financial reporting: issued on or before November 30, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental ,Accounting Standards Board. Governments also have the option of following subsequent private -sector guidance for their business - type activities and. enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private -sector guidance. Governmental fund financial statements are reported using the current. financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. The City considers all revenues. to be available if they are collected within 69 days after the end of the current period. Property and other taxes, licenses, and interest are all considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent that they have matured. Proceeds of general long-term debt and acquisitions under capital. teases are reported as other financing sources,. Proprietary. funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goads. in connection with a proprietary fund's principal ongoing operations. The principal operating revenue of the City's enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets.. All revenues and expenses not meeting this definition are reported as nonoperating revenues.and expenses. (? 6)