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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1997 Note 1. SUNIIVIARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Basis of Statement Presentation (continued) 2) 1?roprietarv Fund Tvne a) Errterorise Funds -The Enterprise Funds are used to account for operations that are fmanced and operated in a manner similar to private business enterprises -where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be fmanced or recovered primarily through user charges. 3) Fiduciary Fund Twe a) amendable Trust and Agency Funds - The Expendable Trust and Agency Funds are used to account for assets held by the City in the capacity of trustee or agent. 4) Account Grouvs a) General Fixed Assets -The General Fixed Assets Account Group is used to account for fixed assets acquired by the City's governmental fund types. b) General Long-Term Debt -The general long-term debt group of accounts contains the long-term liabilities of the City, other than those liabilities included in the Proprietary Funds. D. The accounting and fmancial reporting treatment applied to a fund is determined by its measurement focus and its basis of accounting. Measurement Focus The measurement focus of a fund determines wit the fund measures. All governmental and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Fixed assets used in governmental fund type operations and long-term liabilities expected to be fmanced from governmental funds are accounted for in two account groups, as they are concerned only with the measurement of fmancial position, and are not involved with measurement of results of operations. The Proprietary Funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the balance sheets. Fund equity is segregated into contributed capital and retained earnings components. Operating statements present increases (revenues) and decreases (expenses) in net total assets. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. -11-