Page 21 - Grapevine FY22 Adopted Budget v2

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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