Annual Financial Report 12/31/1985

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1985 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) General Long -Term Debt - This account group contains the long -term obligations of the City including certificates of indebtedness, contracts payable and com- pensated absences payable. It does not include the long -term liabilities of Special Assessment Funds which are accounted for in those funds. BASIS OF ACCOUNTING The modified accrual basis of accounting is followed by the City for its governmental funds (General, Special Revenue, Debt Service, Capital Project, and Special Assessment) and Agency and Expendable Trust 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 of the fiscal period. Also, under this method, expenditures are recognized in the accounting period when the liability is incurred, except for: • Interest on long -term debt which is recognized when due, except for January 1 maturities which are recognized in the previous fiscal period. • Disbursements for inventory type items and prepaid expenses which are considered expenditures at the time of purchase. Major revenue sources susceptible to accrual include property taxes, special assessments, intergovernmental revenues, charges for services and interest on investments. Interest on special assessments is recognized as revenue when due. Major revenue sources not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenues. Such revenues are recorded as revenue when received because they are not measurable until collected. The accrual basis of accounting is followed for the proprietary and nonexpendable trust funds. Under this method of accounting, revenues are recognized during the accounting period in which they are earned and become measurable and expenses are recognized in the accounting period in which they are incurred, if measurable. BUDGETARY DATA The City Council adopts an annual budget for the General Fund and Special Revenue Fund. During the budget year supplemental appropriations and deletions are or may be authorized by the City Council. The amounts shown in the financial statements as "Budget" represent the original budgeted amounts plus all revisions made during the year and /or for the year. 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 budget accounts taken as a whole.