Annual Financial Report 12/31/1989

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Page 2of21 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1989 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FUNDS AND ACCOUNT GROUPS (continued) PROPRIETARY FUNDS Enterprise Funds - to account for operations: (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. FIDUCIARY FUNDS Trust and Agency Funds - to account for assets held by a governmental unit as an agent for individuals, private organizations, other governmental units and/or other funds. ACCOUNT GROUPS The Governmental Fund types are designed to account for the financial flow of a particular fund; therefore, they generally include only current assets and current liabilities on their balance sheets. The City maintains two account groups to account for noncurrent assets and long -term liabilities as follows: General Fixed Assets - The City maintains a separate group of accounts which contain the fixed assets used in the governmental fund type operations. They are assets of the City as a whole and not of individual funds. General Long -Term Debt - This account group contains the long -term obligations of the City including general obligation bonds, special assessment bonds, special obligation bonds and leases payable. MEASUREMENT FOCUS The accounting and reporting treatment applied to a fund is determined by its measurement focus. All Governmental Funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Governmental Fund operating statements present increases (revenues and other financing sources) and (expenditures and other financing uses) in net current assets. All Proprietary Funds are accounted for on a cost of services or "capital maintenance" measurement focus. This means that all assets and liabilities (whether current or noncurrent) associated with this activity are included on their balance sheets. Their reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets.