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CITY OF ROSEVILLE. MINNESOTA NOTES TO THE FINANCZAL STATEMENTS (CONTINUED) DECEM6EF 31, 1983 Note 1- Summarv of Si�nificant Accounting Policies (Continued) C. Basis of Accounting L m Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. Governmental funds, Expendable Trust funds and Agency funds are accounted for using the modified accrual basis of accounting, Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to pay current liabilities. All primary sources of reveeue are accrued except licenses and permits, charges for services and miscellaneous revenues which are not generally measureable until actually received. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred, except for principal and interest on general long-term debt.which is recognized when due, and accumulated unpaid vacation and compensatory time off which are recognized when paid. � Proprietary funds are accounted for using the accrual basis of accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Unbilled utility service receivables are recorded at year end. Budgets and Budgetary Accounting The City adopts an annual budget for the General and Special Revenue funds which are prepared on the modified accrual basis of accounting. The adopted budget indicates the amount that can be expended by each department and each fund based on detailed budget estimates for individual expenditure accounts. All budget revisions must be authorized by the City Council at the request of the City Manager. A11 supplemental appropriations for 1983 were financed by transfers from the Contingency Section of the General Fund. All budget amounts lapse at the end of the year to the extent they have not been expended or encumbered. Assets, Liabilities and Fund Equity Investments - Investments are carried at cost, which approximates market. Property Taxes - Property taxes are set by the City Council with the levy certified to the County, which acts as collection agent, in October prior to the year collectible. Such taxes constitute a lien on the property on January 1 of the year collectible. Cities in Minnesota operate under a levy limitation law which generally permits a percentage increase in taxes levied per capita each year along with certain permitted special levies as set forth in Minnesota Statutes. Levies for bonded indebtedness are not limited by this 1aw. Allowances have been provided for al1 ta�es receivable which were not remitted to the City within 60 days of year end.