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NOTE 1—SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> The Statement of Activities demonstrates the degree to which the direct expenses of a given function or <br /> segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific <br /> function or segment. Program revenues include: 1) charges to customers or applicants who purchase,use, <br /> or directly benefit from goods,services,or privileges provided by a given function or segment,2)operating <br /> grants and contributions,and 3)capital grants and contributions,including special assessments,which are <br /> restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and <br /> other internally directed revenues are reported as general revenues. <br /> The government-wide financial statements are reported using the economic resources measurement focus <br /> and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when <br /> a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as <br /> revenues in the fiscal year for which they are levied. Grants and similar items are recognized when all <br /> eligibility requirements imposed by the provider have been met. <br /> As a general rule,the effect of interfund activity has been eliminated from the government-wide financial <br /> statements. However, charges between the City's Enterprise Funds and other functions are not eliminated <br /> as that would distort the direct costs and program revenues reported in those functions. Depreciation <br /> expense can be specifically identified by function and is included in the direct expenses of each function. <br /> Interest on long-term debt for governmental activities is considered an indirect expense and is reported <br /> separately on the Statement of Activities. <br /> D. Fund Financial Statement Presentation <br /> Separate fund financial statements are provided for Governmental,Proprietary,and Fiduciary Funds. Major <br /> individual Governmental and Enterprise Funds are reported as separate columns in the fund financial <br /> statements. Aggregated information for the remaining Nonmajor Governmental Funds is reported in a <br /> single column in the fund financial statements. A single column is presented in the Proprietary Fund <br /> statements to report Internal Service Fund activity. Fiduciary Funds are presented in the Fiduciary Fund <br /> financial statements by fund type. Since,by definition,Fiduciary Fund assets are held for the benefit of a <br /> third party and cannot be used for activities or obligations of the City, these funds are excluded from the <br /> government-wide statements. <br /> Governmental Fund financial statements are reported using the current financial resources measurement <br /> focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are <br /> recorded in the following manner: <br /> 1. Revenue Recognition — Revenue is recognized when it becomes measurable and available. <br /> "Measurable" means the amount of the transaction can be determined and "available" means <br /> collectible within the current period or soon enough thereafter to be used to pay liabilities of the <br /> current period. Property tax revenue is generally considered as available if collected within 60 days <br /> after year-end. Only the portion of special assessments receivable due within the current fiscal <br /> period is considered to be susceptible to accrual as revenue of the current period. Grants and similar <br /> items are recognized when all eligibility requirements imposed by the provider have been met. <br /> Other revenue is considered measurable and available only when cash is received by the City. <br /> Proceeds of long-term debt is reported as other financing sources. <br /> Major revenue that is susceptible to accrual includes property taxes, special assessments, <br /> intergovernmental revenue, charges for services, and interest earned on investments. Major <br /> revenue that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous <br /> revenue. Such revenue is recorded only when received because it is not measurable until collected. <br /> 62 <br />