Page 345 - FY 2025 Adopted Operating Budget and Business Plan

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FUND ACCOUNTING INFORMATION (CONTINUED)
Modified accrual basis: The modified accrual basis is used for all other funds. Modifications in the accrual basis for these
funds include the following:

1. 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. Primary revenue sources
treated as susceptible to accrual include property taxes collected within 60 days of year-end and sales taxes collected
and held by the state at year end of behalf of the City. Revenue sources from licenses, fines and forfeitures, service
charges and other miscellaneous revenues are generally recognized as the cash is received.

2. Expenditures are recognized when the related fund liability is incurred, except for interest and principal on general
long-term debt which are recorded when due or otherwise payable.

3. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of
monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of
formal budgetary integration.

Basis of Budgeting
The City Council adopts an annual legal budget which covers the General Fund, Debt Service Fund, Enterprise Funds, Internal
Service Funds, and certain Special Revenue Funds (Park Performance, Street Maintenance, and Convention and Event
Services). All appropriations lapse at fiscal year-end. The budgets for the General Fund, Debt Service Fund and Special
Revenue Funds are prepared on the modified accrual basis except for encumbrances, which are treated as budgeted
expenditures. The budgets for the Enterprise Funds are prepared on the modified accrual basis and include encumbrances,
debt principal retirements and capital outlays as expenditures. Additionally, the Enterprise Funds do not include depreciation
as a budgetary expense. Budgetary level of control is exercised at the departmental level. The City Manager, or his designee,
is authorized to transfer budgeted amounts within and among departments; however, any revisions that alter total appropriations
of the fund must be approved by the City Council.

FY 2025 Adopted Budget and Business Plan 336 City of Arlington, Texas