Annual Financial Report 12/31/1983

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1983 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued BASIS OF ACCOUNTING The modified accrual basis of accounting is followed by the City for its governmental funds (General, Special Revenue, Debt Service, Special Assessment, Capital Project Funds). Under this method of accounting, revenues are recognized when they become susceptible to accrual - that is, when they become both measurable and available to finance expenditures and /or liabilities of the fiscal period. Also, under this method, expenditures are recognized in the accounting period when the liability is incurred, except for: (1) interest on long -term debt which is recognized when due, except for January maturities which are recognized in the previous fiscal period; (2) inventory items which are con- sidered expenditures when purchased; and, (3) services extending over more than one accounting period are considered expenditures of the period of acquisition. The City employs the accrual basis of accounting for its proprietary fund. Under this method, revenues are recognized in the accounting period in which they are earned and expenses are recognized in the accounting period when incurred and measureable. Agency Funds employ the modified accrual basis of accounting for monies received and paid. 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. Budget amounts shown in the financial statements are as originally adopted and/or amended by the City Council. Budgets have been prepared on the basis of cash receipts and disbursements. The variance of this basis to the modified accrual basis is not material to the budgetary accounts taken as a whole. CASH AND INVESTMENTS Cash and investment balances consisted of the following at December 31, 1983 and 1982: December 31 1983 1982 Cash - checking $ 3,219 $ 1,092 Petty Cash 150 150 Investments 578,421 408,319 Total $581,790 $409,561 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.