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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 Annual Comprehensive 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.

MEASUREMENT FOCUS AND BASIS OF ACCOUNTING

The government-wide statements are reported using the economic resources measurement focus and the accrual
basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current
or non-current) are included on the statement of net assets and the operating statements present increases
(revenues) and decreases (expenses) in net total assets. Under the accrual basis of accounting, revenues are
recognized when earned. Expenses are recognized at the time the liability is incurred. Governmental fund financial
statements are reported using the current financial resources measurement focus and are accounted for using the
modified accrual basis of accounting. 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 the
amount of the transaction can be determined and “available” means collectible within the current period or soon
enough thereafter to be used to pay liabilities of the current period. The City of Benbrook considers receivables
collected within sixty days after year-end to be available and recognizes them as revenues of the current year.
Expenditures are recorded when the related fund liability is incurred. However, debt service expenditures are
recorded when payment is due.

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