Page 16 - Grapevine FY19 Operating Budget

BASIS OF ACCOUNTING / BUDGETING

The accounts of the City are organized on the basis of funds or account groups, each of which is
considered to be a separate accounting entity. The accounting policies of the City conform to
generally accepted accounting principles for governmental entities as promulgated by the
Governmental Accounting Standards Board. The accounting and financial reporting treatment
applied to a fund is determined by its measurement focus. All governmental 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 combined balance sheet.
Operating statements of these funds present increases (revenues and other financing sources) and
decreases (expenditures and other financing uses) in net current assets.

The modified accrual basis of accounting is used by all Governmental Fund types. Under the
modified accrual basis of accounting revenues are recognized when susceptible to accrual (i.e.,
when they become both measurable and available). “Measurable” means collectible within the
current period or soon enough thereafter to be used to pay liabilities of the current period.
Expenditures are generally recorded when the related fund liability is incurred. However, principal
of and interest on general long-term debt are recorded as fund liabilities when due or when
amounts have been accumulated in the debt service fund for payments to be made early in the
following year. Major revenue sources which have been treated as susceptible to accrual under the
modified accrual basis of accounting include property taxes, charges for services,
intergovernmental revenues, and investment of idle funds.

The accrual basis of accounting is used by all Proprietary Fund types. Under the accrual basis of
accounting, revenues are accounted for on a flow of economic resources measurement focus. With
this measurement focus, revenue is recorded when earned and expenses are recorded at the time
liabilities are incurred. All assets and all liabilities associated with the operation of these funds are
included on the combined statement of net assets. Net assets is segregated into net assets invested
in capital assets, net of related debt, restricted net assets and uninvested net assets. Proprietary
fund-type operating statements present increases (revenues) and decreases (expenses) in total net
assets. For purposes of this budget presentation, depreciation is not displayed and capital
expenditures and bond principal payments are shown as uses of funds.

Governmental Fund Types

Governmental fund types are those through which most governmental functions of the City are
financed. The acquisition, use, and balances of the City’s expendable financial resources and the
related liabilities (except those accounted for in the Proprietary and Fiduciary fund types) are
accounted for through Governmental Fund types. The following are the City’s governmental fund
types.

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