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CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS. <br />DECEMBER 3432012 <br />NOTE .1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />C. Measurement Focus and Basis of Accounting (Continued) <br />Governmental fund financial statements are reported using the current financial <br />resources measurement focus and the modified accrual. basis of accounting. Revenues <br />are recognized: as. soon as they are. both measurable and available. The City considers <br />all revenues to be available. if they are collected within. 60.days after the end of the <br />current period. Property and other taxes, licenses, and interest are all considered to be <br />susceptible to accrual. Expenditures. are recorded when the related fund liability is <br />incurred; except for principal and interest on general long-term debt, compensated <br />- absences, and claims and judgments; which are recognized as expenditures to the. <br />extent that they have matured. Proceeds of general long-term. debt and acquisitions <br />under capital leases are reported as other financing sources. <br />Proprietary funds distinguish operating revenues .,and expenses from nonoperating <br />items. Operating revenues and expenses generally result from providing services .and <br />.producing and delivering goods in connection with a proprietary fund's principal ongoing <br />operations. The.principal operating revenue ofthe City's enterprise funds are charges to <br />customers for .sales and services. Operating expenses. for enterprise funds include the <br />cost of sales and services, administrative expenses, and depreciation on capital assets. <br />All revenues and expenses not. meeting this. ,definition are reported as nonq.perating <br />revenues and expenses. <br />D. B.udgets. <br />Budgets are: adopted on a basis consistent with U.S. generally accepted accounting <br />principles. An annual appropriated::.budget. is adopted for the General Fund. Budgeted <br />expenditure appropriations lapse at year-end. <br />E. Cash and Investments <br />Cash and investment balances from all funds are pooled and. invested to the extent <br />available in investments. authorized by Minnesota Statutes. Earnings from investments <br />are allocated to individual funds on the basis of the fund's equity in the cash and <br />investment. pool. <br />