Audit Report 12/31/1981 - Laserfiche WebLink

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NOTES TO FINANCIAL STATEMENTS - Continued December 31, 1981 Note 1: Summary of Significant Accounting Policies - Continued B. Fixed Assets and Long -Term Liabilities - Continued straight -line method. Depreciation on contributed assets charged to operations is closed to the contributed equity account. The estimated useful lives are as follows: Well 20 years Buildings 25 years Equipment 5 - 10 years Water and sewer system 50 years General Long -Term Debt - This account group contains the long -term obligations of the City including general obligation bonds, cer- tificates of indebtedness, and contracts payable. It does not include the long -term liabilities of Special Assessment Funds which are accounted for in those funds. C. Basis of Accounting Governmental funds are accounted for using the modified accrual basis of accounting.' The revenue is recognized when it becomes measurable and available. Substantially all sources of revenue are accrued except interest on special assessments receivable, which is recognized when due. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include: (1) accumulated unpaid vacation, sick pay, and other employee amounts which are not accrued; (2) principal and interest on general long -term debt which is recognized when due; and (3) prepaid expenses which are recorded. The Proprietary Fund is accounted for using the accrual basis of accounting. The revenue is recognized when it is earned and expenses are recognized when incurred. D. Budgets and Budgetary Accounting The City Administrator submits a proposed operating budget to the City Council for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. Budgets for the General and Special Revenue Funds are adopted on a basis consistent with generally accepted accounting prin- ciples (GAAP). Budgeted amounts shown in the financial statements are as originally adopted by the City Council. E. Investments Investments are stated at cost, which approximates market value. Earnings on investments are allocated to the individual funds based on the average month end cash and investment balances of each fund during the year. - 13 - 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1