07-26-1999 Council Packet - Laserfiche WebLink

Home Browse Search

CITY OF ORONO, MINNESOTA Notes to Financial Statements (continued) December 31, 1998 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Measurement Focus The measurement focus of a fund determines what the fund measures. All governmental funds and the Expendable Trust Fund are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Proprietary Funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the balance sheet. Fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary' fund type operating statements present increases (revenues) and decrease.^ (expenses) in net total assets. Fixed assets used in governmental fund type operations and long-term liabilities expected to be financed from governmental funds are accounted for in two account groups, as they are concerned only with the measurement of financial position, and are not involved with measurement of results of operations. Basis of Accounting A fund’s basis of accounting determines when a transaction or event is recognized in the fund’s operating statement. The modified accrual basis of accounting is used by all governmental fund types and the Expendable Trust Fund. Under this basis of accounting, transactions are recorded in the following manner: 1. Revenue Recognition ~ Revenue is recognized when it becomes measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the curreu. ;. riod. Major revenue that is susceptible to accrual includes property taxes, special assessments, intergovernmental revenue, charges for services, and interest earned on investments. Other revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous rc .enue. Such revenue is recorded only when received because it is not measurable until collected. 2. Recording of Expenditures - Expenditures are recognized under the modified accrual basis of accounting w'hen the related fund liability is incurred, except for principal and interest on general long-term debt which is recognized when due. -28- i