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CITY OF ROSEVILLE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 NOTE 1- SUMMARY OF SIGNIFICANT ACCOLTNTING POLICIES (Continued) C. Measurement focus, basis of accounting, and fmancial statement presentation (Continued) 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 proprietary fund's principal ongoing opera.tions. The principal operating revenue of the City's enterprise funds and internal service funds are chazges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition aze reported as nonoperating revenues and expenses. When both restricted and unrestricted resources aze available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they aze needed. D. Assets, liabilities, and net assets or equity 1. Deposits and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and investments which mature within three months. State statutes authorize investments which aze direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 and receives the highest credit rating, is rated in one of the two highest ra.ting categories by a statistical rating agency, and all of the investments have a final maturity of thirteen months or less; general obligations rated "A" or better; revenue obligations rated "AA" or better, general obligations of the Minnesota Housing Finance Agency rated "A" or better; bankers; acceptances of United States' banks eligible for purchase of by the Federal Reserve System; commercial paper issued by Unites States corporations or their Canadian subsidiaries, of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United Sates insurance company, and with a credit quality in one of the top two highest categories, repurchase or reverse purchase agreements and securities lending agreements with financial institutions qualifies as a "depository" by the City entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. Investments for the City are reported at fair value. 41