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.CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER .31, 2019 <br />NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />L. Net Position/Fund Balance: (Continued) <br />Restricted _ funds are constrained from outside parties (statute, grantors, bond <br />agreements, etc.). <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 />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 />When an expenditure is incurred for purposes for which .committed, assigned and <br />unassignedamounts. are available, it is the City's: policy to use committed first, then <br />assigned, and finally unassigned amounts. <br />M. Interfund Transactions <br />lnterfund. 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 expend itureslexpenses in the reimbursing fund and as reductions of expenditures or <br />expenses in the fund that is reimbursed. Ali other 'interfund transactions are reported as <br />transfers. <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 />NOTE 2 DEPOSITS AND INVESTMENTS <br />A. Deposits <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#inancial 'institutions which are authorized by the City Council. <br />t2o) <br />