19D - EXHIBIT FY 10-11 RDA Annual Report

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COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA Notes to the Basic Financial Statements (Continued) Year Ended June 30, 2011 Governmental Funds In the fund financial statements, governmental funds are presented using the modified accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. For this purpose, the Agency considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Revenue recognition is subject to the measurable and available criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Noncurrent portions of long -term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatment is used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent portions of other long -term receivables are offset by deferred revenues. When both restricted and unrestricted resources are combined in a fund, expenses /expenditures are considered to be paid first from restricted resources, and then from unrestricted resources. (c) Major Funds The major funds of the Agency are as follows: Debt Service Fund The Merged Project Area Debt Service Fund is used to account for the receipt of tax increment revenue generated by the Merged Project Area, the payment of interest and principal on the Agency's outstanding debt, and pass- through payments. 23