Page 21 - Grapevine FY20 Approved Budget

BASIS OF ACCOUNTING / BUDGETING

The accounts of the City are reported using the economic resources measurement focus and the
accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenue in the year for which they are levied. Grants and similar items are recognized as revenue
as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund level financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon
as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the City considers revenues to be available if they are collected within 60
days of the end of the current fiscal period. In applying the susceptible to accrual concept to
intergovernmental revenue, the legal and contractual requirements of the numerous individual
programs are used as guidance. Generally, monies must be expended on a specific purpose or
project before any amounts will be paid to the City; therefore, revenues are recognized based upon
the expenditures recorded. Ad valorem taxes are recognized as revenues in the year for which they
are levied. Sales taxes, franchise taxes, hotel occupancy taxes, charges for services and fines are
recognized as revenue as earned, when measurable and available. Licenses, permits, and
miscellaneous revenues (except earnings on investments) are recorded as revenues when received
in cash because they are generally not measurable until actually received. Investment earnings are
recorded as earned since they are measurable and available.

All proprietary funds are accounted for using the economic resources measurement focus and the
accrual basis of accounting. With this measurement focus, all assets, deferred outflows of
resources, liabilities and deferred inflows of resources associated with the operation of these funds
are included on the statement of net position. Proprietary fund-type operating statements present
increases (e.g., revenues) and decreases (e.g., expenses) in net position. Proprietary funds
distinguish operating revenues and expenses from non-operating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund’s principal ongoing operations. The principal operating
revenues of the City’s water and sewer and municipal golf course are charges to customers for
sales and services. Operating expenses for the enterprise funds include the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenues and expenses
not meeting this definition are reported as non-operating revenues and expenses.

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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