1996 CAFR - Laserfiche WebLink

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CITY OF R.AMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,1996 1\'ote 1. SUMMARY OF SIG1vIFICANT ACCOUNTING POLICIES (continued) D. Measurement Focus and Basis of Accounting_(continued Basis of Accounting A fund's basis of accounting determines men a transaction or event is recognized in the fund's operating statement. All governmental, and expendable trust and agency fund types use the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded in the following manner: 1. Revenue Reco ng ition - Revenue is recognized when it becomes measurable and available. " " means available "Measurable" means that the amount of the transaction can be determined and collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Property tax and special assessment revenue is generally considered to be available if collected within 60 days after year-end. State revenue is recognized in the year in which it applies according to Minnesota Statutes. Federal revenue is recorded in the year in which the related expenditure is made. Other revenue is considered available if collected within one year. 2. Recording of Expenditures -Expenditures are generally recorded when a liability is incurred; however, expenditures are recorded as prepaid for approved disbursements or liabilities incurred in advance of the year in which the item is to be used. Interest and principal expenditures in the Debt Service Funds are ' recognized on their due dates. The Proprietary Funds are reported on the accrual basis of accounting. Under this method, revenues are recognized when earned and expenses are recognized when they are incurred. The City applies only those 1 applicable pronouncements of the Financial Accounting Standards Board issued on or before November 30, 1989 in accounting and reporting for its proprietary operations. E. mash and Investments Cash balances from all funds are combined and invested to the extent available in securities authorized by ' Minnesota State Statutes. Earnings from such investments are allocated to the individual funds on the basis of the average monthly cash and investment balances of the respective funds. Temporary cash and investments are stated at cost or amortized cost. Investments are adjusted to market value only when a permanent decline in market has occurred or when such investments will not be carried to maturity. Assets of the Deferred Compensation Funds are held by trustees and reported at market value. F. PrQperiy Taxes A property tax levy is approved by Council resolution prior to December 31, of each year, and certified to the County Auditor for collection. Property taxes attach an enforceable lien on taxable property within the City on 1 January 1. A portion of the property taxes levied is paid by the State of Minnesota through homestead and agricultural credit aid (RAGA) which is included in intergovernmental revenue in the financial statements. Property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. The County provides tax settlements to cities three times a year. Revenue from property taxes which is not collected within 60 days of year-end is deferred since it is not available to meet obligations of the current year. -12-