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NOTES TO THE FINANCIAL STATEMENTS (Continued) <br /> 1C. Basis of Accounting <br /> Governmental Fund Types are accounted for using the modified accrual basis of accounting. Revenues are <br /> recognized when they become measurable and available to finance expenditures of the current period. Accrued <br /> revenues include property taxes, sales taxes, utility users tax, and transit occupancy tax received within sixty <br /> days after the year end, and earnings on investments. (See Note 3A also.) Grant funds earned but not <br /> received are recorded as receivables and revenues, and grant funds received before the revenue recognition <br /> criteria have been met are reported as deferred revenues. Expenditures are recorded when the related fund <br /> liability is incurred except that unmatured principal and interest on general long-term debt are recorded when <br /> due. <br /> The accrual basis of accounting is followed for the Proprietary Fund Types. Revenues are recognized when <br /> they are earned and expenses are recognized when the liability is incurred. Unbilled water utility, refuse <br /> collection, sanitation, and water utility user tax revenues are accrued at year end. <br /> Fiduciary Fund Types are accounted for according to the nature of the fund. The City has only Agency Funds <br /> which are purely custodial in nature (assets equal liabilities) and thus do not involve measurement of results <br /> of operations. Agency assets and liabilities are accounted for on a modified accrual basis. <br /> ID. Measurement Focus <br /> All Governmental Fund Types are accounted for on a spending or"financial flow" measurement focus. This <br /> means that(generally) only current assets and current liabilities are included on their balance sheets, with the <br /> exception that land inventory held for resale is reported on their balance sheets offset by fund balance reserve <br /> accounts. Statements of revenues, expenditures, and changes in fund balances for Governmental Fund Types <br /> generally present increases (revenues and other financing sources) and decreases (expenditures and other <br /> financing uses) in net current assets. <br /> All Proprietary Fund Types are accounted for on a cost of services or "capital maintenance" measurement <br /> focus. This means that all assets and liabilities (whether current or non-current) associated with the activity <br /> are included on the balance sheets. Their reported fund equity(total net assets) is segregated into contributed <br /> capital and retained earnings. Proprietary Fund Types operating statements present increases (revenues) and <br /> decreases (expenses) in total net assets. Depreciation of assets attributable to contributions for that purpose <br /> is treated as a reduction of contributed capital, rather than a charge against retained earnings, if the fixed <br /> assets were acquired from grants,entitlements or shared revenues externally restricted for capital acquisition. <br /> 1E. General Budget Policies. Encumbrances, and Budgetary Basis of Accounting <br /> The City and its component units' fiscal year begins on July 1 of each year and ends the thirtieth day of June <br /> the following year. On or before the fifteenth of June of each year, the City Manager submits to the City <br />