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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2012 36 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 1. Government-Wide Statements (Continued) In the government-wide statement of net position, both the governmental and business-type activities columns: (a) are presented on a consolidated basi s by column; and (b) are reported on a full accrual, economic resource basis, which recogni zes all long-term assets and receiva bles as well as long-term debt and obligations. The City’s net position is reported in three parts: (1) net investment in capital assets; (2) restricted net position; and (3) unrestricted net positi on. The City first utilizes restricted resources to finance qualifying activities. The statement of activities demonstrat es the degree to which the direct expenses of each function of the City’s governmental activities and diffe rent business-type activities are offs et by program revenues. Direct expenses are those that are clearly identifiable w ith a specific function or activity. Program revenues include: (1) fees, fines, and charges paid by the reci pients of goods, services, or privileges provided by a given function or activity; and (2) grants and contributi ons that are restricted to meeting the operational or capital requirements of a particular function or activity. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 2. Fund Financial Statements The fund financial statements provide information about the City’s funds, including its fiduciary funds and blended component unit. Separate statements for each fund categor y (governmental, proprietary, and fiduciary) are presented. The emphasis of governmental and proprietary fund financial statements is on major individual governmental and enterprise funds, with each displa yed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charge s for services, result from exchange transactions associated with the princi pal activity of the fund. Exchange tran sactions are those in which each party receives and gives up essentially e qual values. Nonoperating revenues, su ch as subsidies and investment earnings, result from nonexchange trans actions or incidental activities. The City reports the following major governmental funds: General Fund The general fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. General Obligation Improvement Bonds 2005A Fund The general obligation improvement bonds 2005A fund accounts for the accumulation of resources for, and the payment of, interest, principal a nd related costs on general long-term debt. Improvement Note 2009A Fund The improvement note 2009A fund accounts for the accumu lation of resources for, and the payment of, interest, principal and related costs on general long-term debt. Municipal State Aid Fund The Municipal State Aid f und accounts for the collection of assessmen ts on municipal state aid projects.