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CITY OF ROSEVILLE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement focus, basis of accounting, and financial statement presentation (Continued) Additionally, the City reports the following fund types: Internal service funds account for the worker's compensation and general insurance services provided to other departments or agencies of the City. Agency funds account for resources held by the Ciry in a purely custodial capacity for the Grass Lake Water Management Organization, East Metro SWAT, Roseville Islamic Cemetery, and the Roseville Visitors Association. As a rule, the effect of interfund activiry has been eliminated from the government-wide financial statements. Exceptions to this rule are other charges between the City's water and sewer function and various other functions of the primary government and its component unit. Elimination of these charges would distort the direct costs and program revenues reported from the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 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 operations. The principal operating revenue of the City's enterprise funds and internal service funds are charges 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 are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. D. Assets, liabilities, defer�ed inflows of resources, and net position/fund balance 1. Deposits and investments The enterprise and internal service funds pai�ticipate in the pooling of City-wide cash and investments. Amounts from the pool are available to these funds on demand. As a result, the cash and investments of the enterprise and internal service funds are considered to be cash and cash equivalents for statement of cash flow purposes.