Page 17 - Bedford-FY23-24 Budget

Basis of Budgeting
All governmental fund types, special revenue funds and agency fund types use the modi ed accrual basis of
accounting for both budgeting and accounting. Under the modi ed accrual basis of accounting, revenues are
recognized when susceptible to accrual, i.e., when they become both measurable and available. “Measurable”
means that 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 considers
property taxes as available if they are collected within 60 days after year-end.

Expenditures are recognized when the related fund liability is incurred. Principal and interest on general long-
term debt are recorded as fund liabilities when due or when amounts have been accumulated in the Debt
Service Fund for payments to be made early in the following year.

Revenues susceptible to accrual are property taxes, sales taxes, franchise taxes, special assessments, interest
and charges for services. Fines and permits are not susceptible to accrual because generally they are not
measurable until received in cash.
Deferred revenues arise when potential revenue does not meet both the “measurable” and “available” criteria
for recognition in the current period. Deferred revenues also arise when the City receives resources before it has
a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In
subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the
resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is
recognized.

The accrual basis of accounting is utilized by proprietary type funds, which include the Water/Sewer Fund and
the Stormwater Fund. Under this method, revenues are recognized when earned and expenses are recognized
at the time the liabilities are incurred. The City's policy is to apply all Financial Accounting Standards Board
standards to its proprietary funds unless they con ict with Governmental Accounting Standards Board (GASB)
guidance.

City of Bedford, TX | Proposed Budget FY 2023-2024 Page 17