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CITY OF GEM LAKE; MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS ❑ECEMBER.31, 2019 NOTE 'i SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUE©) B. Basic Financial Statements (Continued). 2. Fund Financial Statements (Continued) Parks and Playgrounds Fund - The Parks. and Playgrounds Fund is used to account for the accumulation of resources that are restricted. for capital outlays and other costs related to maintaining and improving the City's parks arid playgrounds. The City reports thefollowing major.proprietary funds: Sewer Fund — The sewer fund accounts for customer sewer service charges that are used to finance sewer operating expenses. Water Fund — The water fund accounts for customer water service charges that are used to finance water operating expenses. C. Measurement Focus and 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 for which they are levied. Grants and:similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been niet. Governmental fund financial statements are reported using the. current financial resources measurement focus and #he. 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 60 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 long-term 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 leases 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 goods in connection with a proprietaryfund'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. notmeeting this definition are reported as nonoperating revenues and expenses. (1 5)