Page 31 - CityofGrapevineFY26AdoptedBudget

BASIS OF ACCOUNTING / BUDGETING

The accounting and budgeting 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.

General Government Funds - Includes the General, Debt Service, and Permanent Capital/Street Maintenance funds. The General fund is the general
operating fund of the City. It is used to account for all revenues and expenditures except those required to be accounted for in other funds. Major
functions financed by the general fund include Administration, Internal Services, Fire Department, Police Department (Administration, Community
Outreach, and Animal Services), Library, Public Works, Parks and Recreation, and Development Services. The Debt Service fund is used to account for
the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs.

Special Revenue Funds - Special Revenue funds are used to account for the proceeds of specific revenue sources, other than expendable trusts or major
capital projects. The Convention and Visitors Bureau (CVB) Fund, CVB Incentives Fund, Stormwater Drainage Utility Fund, Crime Control and Prevention
District (CCPD) Fund, Lake Parks Fund, 4B Transit Fund, and the Economic Development Fund. These funds account for all revenues and expenditures
relating to hotel occupancy taxes, stormwater drainage utility fees, CCPD half-cent sales tax for crime control, campgrounds and boat ramps, and half-
cent sales tax for commuter rail/economic development. 26