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CITY OF ROSEVILLE <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2002 <br />NOTE 1 - SUMMARY OF SIGNIFICAN "I' ACCOUNTING POLICIES (Continued) <br />C. Measurement focus, basis of accounting, and financial statement presentation (Continued) <br />As a general rule the effect of interfund activity has been eliminated from the government --wide <br />financial statements. Exceptions to this rule are payments in -lieu of taxes and other charges <br />between the City's water and sewer function and various other functions of the City. Elimination of <br />these charges would distort the direct costs and program revenues reported from the various <br />functions concerned. <br />Amounts reported as program revenues include 1) charges to customers or applicants for goods, <br />services, or privileges provided, 2} operating grants and contributions, and 3) capital grants and <br />contributions, including special assessments. Internally dedicated resources are reported as general <br />revenues rather than as program revenues. Likewise, general revenues include all taxes. <br />Proprietary funds distinguish operating revenues and expenses from nonoperating items. operating <br />revenues and expenses generally result from providing services and producing and delivering goods <br />in connection with a proprietary fund's principal ongoing operations. The principal operating <br />revenue of the City's enterprise funds and internal service funds are charges to customers for sales <br />and services.' operating expenses for enterprise funds and internal service funds include the cost of <br />sales and services, administrative expenses, and depreciation on capital assets. All revenues and <br />expenses not meeting this definition are reported as nonoperating revenues and expenses. <br />When both restricted and unrestricted resources are available for use, it is the City's policy to use <br />restricted resources first, and then unrestricted resources as they are needed. <br />D. Assets, liabilities, and net assets or equity <br />1. Deposits and investments <br />The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and <br />investments. <br />48 <br />