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24 CITY OF ST. ANTHONY, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1974 Note 1 - Summary of significant accounting policies The City statements are shown or, both the accrual and modified accrual basis of accounting with the exception of the General Fund which reported its trans- actions on the cash basis which does not conform with generally accepted accounting principles. The transactions of the Special revenue and General Debt Service funds are shown on the modified accrual basis, all other funds are shown on the accrual basis. Funds maintained on the modified accrual basis (which is in accordance with generally accepted accounting principles, in certain circumstances) are those funds which record transactions in the following manner: (a) General property taxes - revenue is recognized in. the year of antici- pated collection; (b) Interest expense on general bonded indebtedness and special assessment bonds - Interest expense is recorded as an expenditure when paid; interest is not accrued unless fully matured and not paid; (c) Interest revenue an special assessments receivable - inte.re,:.L revenue is recoL;nized in the year of anticipated collection of the current prin-- cipai installment; (d) Construction contracts - all contracts are recorded utilizing encum- brances, with the related expenditures recognized as the construction is incurred with the unexpended portion of the contract shown as an appropriation of the fund balance; and (e) Bond and interest payments due January 1 - expenditures are recognized when amounts are remitted to the fiscal agent (usually in December) for payment of bonds and interest. ]Investments - Investments are stated at cost which approximates market. Inventories - Inventories held by the Enterprise Fund are stated at cost. Property and equipment - Enterprise funds - The property and equipment of. the Enterprise funds are stated at cost. Depreciation has been provided using the straight-line method over the estimated useful lives of the assets. The depreciation on Public Utility Fund property and equipment which was financed by special assessments, grants and contributions is charged to current revenues but then redistributed as a charge to the contributions in aid to construction account. Note 2 - Prior period adjustments Through December 31, 1973 the General Fund was shown on the accrual basis. The fund balance has been restated to reflect.the change to the modified accrual basis.