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CITY OF ROSEVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31. 1984 Note 1- Swnmary of Si�nificant AccountinQ Policies (Continued) C. Basis of Accounting Sasis 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 revenue are accrued except licenses and permits, charges for services and miscellaneous revenues which are not generally measurable until actually received. Interest on special assessments is recognized as revenue when due. 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. D. Sudgets 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. Ail budget revisions must be authorized by the City Council at the request of the City Manager. All supplemental appropriations for 1984 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. The level which expenditures may not legally exceed appropriations is at the fund level. E. Assets, Liabilities and Fund Equity Investments - Investments are Carried at cost, which approximates market. Property Taxes - Property tax levies are set by the City Council in October each year and are certified to the County for collection the following year. Zn Minnesota, counties act as collection agents for all property taxes. The County spreads the levies over all taxable property in the City. Such taxes become receivables of the City as of January 1. _Zg_