Page 34 - CityofColleyvilleFY23AdoptedBudget

Basis of Budgeting
Budgets of general governmental type funds are prepared on a modi ed accrual basis. Under the modi ed
accrual basis of accounting, revenues are recognized when they are measurable (the amount of revenue can
be determined) and available (collectable within the current period and 60 days thereafter for property and
sales taxes). The following funds are general governmental type funds and their budgets are prepared on that
basis: General Fund and Debt Service Fund.

The budget basis for the Utility Fund and Drainage Utility Fund is the full accrual basis. Under the full accrual
basis of accounting, revenues are recorded when earned and expenses are recorded at the time they are
incurred. For example, unbilled charges for water and sewer usage are estimated and recorded.

Differences between the Basis of Accounting and Basis of Budgeting:

A Comprehensive Annual Financial Report (Annual Report) is prepared by the City at the end of a scal year.
The basis of this report is "generally accepted accounting principles" (GAAP). This report basically replicates the
budget presentation, with the following exceptions in both the Utility Fund and Drainage Utility Fund:

In these budgets, principal repayments of debt are classi ed as expenses and in the CAFR they are
classi ed are reductions of a liability as required by GAAP.

Also in the basis of budgeting in these budgets, the purchases of capital equipment and capital
improvements are budgeted as expenses. Under the GAAP basis of accounting, these purchases are
classi ed as assets of the fund in the CAFR.

Under the GAAP basis of accounting, depreciation expense on capital equipment and capital
improvements are recorded annually. This is not recorded as an expense under the basis of budgeting
because the purchases of capital equipment and capital improvements are budgeted as expenses in the
year of acquisition.

City of Colleyville | Budget Book 2023 Page 34