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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1995 <br />— Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />The City of Lino Lakes is a public corporation formed under Minnesota Statute 410. As such the City is under <br />home rule charter regulations and applicable statutory guidelines. <br />The financial statements of the City of Lino Lakes have been prepared in conformity with generally accepted <br />accounting principles as applied to governmental units by the Governmental Accounting Standards Board <br />— (GASB). The following is a summary of the significant accounting policies. <br />Immo <br />A. FINANCIAL REPORTING ENTITY <br />As required by generally accepted accounting principles, the financial statements of the reporting <br />entity include those of the City of Lino Lakes and its component units. Generally, component units <br />are legally separate organizations for which the officials of the primary government are financially <br />accountable. <br />COMPONENT UNITS <br />In conformity with generally accepted accounting principles, the financial statements of component <br />units have been included in the financial reporting entity either as blended component units or as <br />discretely presented component units. <br />Blended Component Units. The Economic Development Authority (EDA) of Lino Lakes is an entity <br />separate from the City. However, for financial reporting purposes, the EDA is reported as if it were <br />part of the City's operations because the members of the City Council serve as commission members. <br />The EDA does not issue separate financial statements. <br />B. FUND ACCOUNTING <br />The accounting system of the City is organized and operated on a fund basis. A fund is defined as a <br />fiscal and accounting entity with a self - balancing set of accounts recording cash and other financial <br />resources, together with all related liabilities and residual equities or balances, and changes therein, <br />which are segregated for the purpose of carrying on specific activities or attaining certain objectives <br />in accordance with special regulations, restrictions or limitations. <br />The following types of funds and account groups are employed by the City: <br />GOVERNMENTAL FUNDS <br />General Fund - to account for all financial resources except those required to be accounted <br />for in another fund. <br />— Special Revenue Funds - to account for the proceeds of specific revenue sources that are <br />legally restricted to expenditures for specified purposes. <br />Debt Service Funds - to account for the accumulation of resources for, and the payment of, <br />general long -term debt principal, interest, and related costs. <br />Capital Project Funds - to account for financial resources to be used for the acquisition or <br />construction of major facilities other than those financed by Proprietary Funds. <br />27 <br />