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NOTES TO FINANCIAL STATEMENTS - Continued <br />December 31, 1985 <br />Note 1: Summary of Significant Accounting Policies - Continued <br />(2) Proprietary Fund Types - <br />a) Enterprise Funds - Enterprise Funds are used to account <br />for operations that are financed and operated in a manner <br />similar to private business enterprises --where the intent <br />of the governing body is that the costs of providing goods <br />or services to the general public on a continuing basis be <br />financed or recovered primarily through user ci:arges. <br />(3) Account Groups - <br />a) General Fixed Assets - This separate group of accounts <br />contains the fixed assets of the governmental fund types. <br />b) General Long -Term Debt - This group of accounts contains <br />the long-term obligations )f the City other than those <br />liabilities included in the Proprietary and Special <br />Assessment Funds. <br />C. BASIS OF ACCOUNTING - <br />(1) Modified Accrual - Governmental funds are accounted for using <br />the modified accrual basis of accounting. Their revenue is <br />recognized when it becomes measurable and available as net <br />current assets. Their expenditures are generally recognized <br />when the related fund liability is incurred. <br />(2) Accrual - Proprietary funds are accounted for using the <br />accrual basis of accounting. Their revenue is recognized when <br />it is earned and expenses are recogn= ed when they are <br />incurred. <br />D. CASH AND INVESTMENTS - Cash balances from all funds are combined <br />and invested to the extent available in short-term -.,es tments. <br />Investments are stated at cost, which approximates mar?:et value. <br />Earnings on investments are allocated t_the individual funds based <br />upon the average of month -end cash and investment balarces. <br />E. INVENTORY - Inventories are stated at the lower of cost or market <br />on the first -in, first -out basis. <br />F. PROPERTY, PLANT, AND EQUIPMENT - Fixed assets are stated at cost, <br />estimated historical costs, or in the case of contributions, at <br />fair market value at the time received. Infrastructure fixed <br />assets - roads, bridges, curbs and gutters, streets and sidewalks, <br />drainage systems, lighting systems, and similar assets - are not <br />included in the Ci`I s accounting records. <br />(1) General Fixed Assets Account Group - General fixed assets are <br />not depreciated. The cost of property, plant, and equipment <br />are accounted for as current expenditures of the governmental <br />fund types in the year purchased. <br />12 - <br />