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NOTE 1 CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑ECEMBER 31, 2019 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Budgets Budgets are adopted on a basis consistent `with .accounting principles generally accepted in the United States ofAmerica. An annual appropriated 'budget is adopted for the General Fund. Budgeted expenditure appropriations lapse at year-end. E: Cash and Investments Cash and investment balances from all funds are. pooled and invested to the extent available in investments. authorized by Minnesota Statptes. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund in the governmental fund financial statements, and an interfund. payable in the fund with the deficit, until. adequate resources are received. These interfund payables are eliminated. for statement of net position presentation. Investments are stated at fair value as of the balance sheet date. Interest earnings are accrued at the balance sheet date. For purposes of the statement of cash flows, the Proprietary Fund considers all highly liquid investments with a maturity of.three months or less. when purchased to be cash equivalents. All of the cash and investments allocated to the .proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types: is considered cash equivalents. F. Prepaid Items Certain payments to vendors reflect costs applicabl are recorded as 'prepayments: Prepaid items. are method and recorded as an expense -or expenditur portion of the relevant funds' balances equal to segregated as nonspendable. G. Property Tax Credits e e to future.. accounting periods and reported using. the consumption at the time of consumption. That material prepaid items has been Property taxes on homestead property (as defined by state statutes) are partially reduced by property tax credits: These credits are paid to the City by the .state in lieu of taxes levied against homestead property. The state remits these credits through installments each year, These credits are recognized as revenue by the City at the time of collectiori. (1s)