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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1992 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2) proprietary Fund Types - These funds are used to account for operations that are organized to be self- supporting through user charges. The funds included in this category are the Enterprise Funds. a) Enterprise Funds - The Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business sector enterprises, where the intent is that the cost of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. 3) Fidnriary Fund Types - These funds are used to account for assets held by the City as a trustee or agent for individuals, private organizations, other governmental units, and other funds. The funds included in this category are as follows: a) Trust Funds - The City's Trust Funds are classified as Expendable Trust Funds and are accounted for in essentially the same manner as Governmental Funds. b) Agency Funds - The City's Agency Funds are custodial in nature and do not involve measurement of results of operations. In addition to the three fund types, the City also maintains two account groups that are described as follows: 1) General Fixed Assets Account Group - This is not a fund but rather an account group that is used to account for general fixed assets acquired principally for general purposes and excludes fixed assets in the Enterprise Funds. 2) General Long -Term Deht Account Group - This is not a fund but rather an account group that is used to account for outstanding principal balances of general obligation bonds and other long -term debt not reported in the Proprietary Funds. C. Measurement Focus The accounting and reporting treatment applied to the assets and liabilities associated with a fund are determined by its measurement focus. Governmental, Expendable Trust and Agency Funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance is considered a measure of "available spendable resources." Governmental Fund operating statements present increases (revenue 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 "available spendable resources" during a period. Fixed assets used in Governmental Fund Type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group and are recorded therein at historical cost.