Page 240 - Benbrook FY2021

BUDGETARY BASIS – BASIS OF ACCOUNTING

BASIS OF ACCOUNTING

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are
accounted 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 (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.

All governmental fund types are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting,
revenues are recognized when susceptible to accrual (when the revenues become both measurable and available). Measurable means the
amount of the transaction can be determined; available means collectible within the current period or soon enough after to be used to pay
liabilities of the current period. The City considers ad valorem taxes, penalty and interest as available, if they are collected within thirty days
after year-end. Licenses, permits and filing fees, fines and forfeitures, charges for services, and other revenues are recorded when received
because these revenue sources are generally not measurable until actually received. Franchise taxes, sales taxes, other taxes, intergovernmental
revenue, and use of money and property (interest income) are accrued when their receipt occurs soon enough after the end of the accounting
period so as to be considered both measurable and available. Gross sales taxes are considered measurable when in the hands of the
intermediary collecting government and are recognized as revenue at that time.

Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Principal and
interest payments on general long-term debt are recorded as fund liabilities when due.

The City reports deferred revenues on its combined balance sheet of the City’s Comprehensive Annual Financial Report. Deferred revenues
arise when a potential revenue does not meet both the measurable and available criteria for recognition in the current period. Ad valorem
taxes, penalty and interest, and street assessments that are not receivable within thirty days from year-end are classified as deferred revenues.
In subsequent periods, when both revenue recognition criteria are met, the liability for deferred revenue is removed from the combined balance
sheet and the revenue is recognized.

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