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CITY OF ROSEVILLE MINNESO7A NOTES TO FINANCIAL STATEMENTS (CON7INUED) DECEMBER 31. 1989 Note 1- Summarv of Siqnificant Accountinq PoLicies (Continued) included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing so�rces) and decreases (i.e., expenditures and other financing uses) in net current assets. All proprietary tunds, nonexpendabte trust funds and pension trusT funds are accounted for on a flow of e<onomic resource measurement focus. With this measurement focus, all assets and aLL liahilities associated with [he operation of theses funds are incLuded on the baLance sheet, iund equity (i.e., net totaL assets) is segregated into contributed capitaL and retained earnings components. Proprietary fund-type operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. The modified accruat basis of accounting is used 6y alt governmental fund types, expendabte trust funds and agency funds. Under the modified accruat basis of accounting, revenues are recognized when suscepti6Le to accrual (ie., when they 6ecome both measura6Le and available). 'Measurable' means the amount of the trans- attion can be determined and "avaita6te' means cotlectibte within the [urrent period or soon enough thereaf- ter to be used to pay liabitities of the current period. The government tonsiders property taxes as avait- a6le if they are coLLected within 60 days after year end. A one-year avaitability period is used for reve- nue retognition for aLL oiher governmental fund revenues. Expenditures are recorded uhen the retated fund tiahility is incurred. PrincipaL and interest on genereL Long-term deht are recorded as fund liabilities �- when due or when amounts have been acwmulated in the debt service fund for payments to be made early in the foLLowing year. Those revenue susceptible to accruaL are property taxes, special assessments, Licenses, interest revenue and charges for services. State aids held by [he state at year end on behaLf of the government also are recog- nized as revenue. Fines, and permits are not susceptihte to accruaL hecause generally they are not measura- bte untit received in cash. . The accrual hasis of accounting is utitized by proprietary fund types, pension trust funds and nonexpendabLe trust funds. Under this method, revenues are recorded when earned and ezpenses are recorded at the time LiahiLities are inwrred. The government reports deferred revenue on its combined batance sheet. Deferred revenues arise When a potential revenue does not meet 6oth the "measura6Le' and 'avaitable' criteria for remgnition in the current period. Deferred revenues aLso arise uhen resourtes are received by the governmenC before it has a legal ctaim to them, as when grant monies are received prior to the incurrence ot quaLifying expenditures. In su6sequent periods, uhen both revenue recognition criteria are met, or when the governmen[ has a legat daim to The resources, the Liabitity for deferred revenue is removed from the com6ined balance sheet and �- revenue is recognized. Expenditures are generally recognized under the modified accrual 6asis of accounting when the related fund tiability is incurred, except for principal and interes[ 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. Unbitled utility service receivabtes are recorded ai year end. 31