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CITY OF GEM LAKE, MINNESOTA <br />_. NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31,.2000 <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />B. Basic Financial Statements (Continued). <br />2. Fund Financial Statements (Continued) <br />The City reports the following major proprietary fund: <br />Sewer Fund — The sewer fund accounts toe customer sewer service charges <br />that are used to finance sewer operating expenses. <br />C. Measurement Focus and Basis of Accounting <br />The government -wide, proprietary fund; and fiduciary fund financial statements. are: <br />reported using the economic resources measurement focus and the accrual basis of <br />accounting. Revenues are recorded when earned, and expenses are recorded when a <br />liability is. incurred, regardless of the. timing of related cash flows. Property taxes are <br />recogr»zed,as revenues in the year for which they are levied. Grants and similar items <br />are recognized as revenue as soon as all eligibility requirements imposed by the <br />.provider grave been met. <br />Private -sector standards Of accounting and financial reporting issued on or before <br />November 30, 1989, generally are followed`irx both the government -wide and proprietary <br />fund financial statements to the extent that. those .standards do not conflict with or` <br />--- :contradict .guidance of the Governmental Accounting Standards Board. GoVemments <br />also have the option:of following subsequent private=sector guidance for their business - <br />type activities and.enterprise funds, subject to this. same limitation, The City has elected <br />not to follow subsequent. pOvate-sector guidance. <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 lortg4orni debt, compensated <br />-absences,. arid .claims and judgments,. which are recognized. as expenditures tag* 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'ss principal ongoing <br />operations. The. principal operating. revenue of the City's enterprise funds are charges to <br />.customers for sales and services. Operating expenses for enterprise funds include the <br />cost of sates and services, administrative expenses, and depreciation :on capitall assets. <br />All revenues and expenses not meeting this definition are reported as nonoperating <br />revenues and expenses. <br />00 <br />