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CITY OF LA PORTE, TEXAS <br />NOTES TO THE FINANCIAL STATEMENTS (continued) <br />Note 1 - Summary of Significant Accounting Policies (continued) <br />C.Measurement Focus, Basis of Accounting and Financial Statement Presentation <br />The government-wide financial statements are reported using the economic resources measurement focus <br />and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are <br />recognized when earned and expenses are recorded when a liability is incurred, regardless of the timing of <br />related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants <br />and similar items are recognized as revenue as soon as all eligibility requirements imposed by the <br />provider have been met. <br />Governmental fund financial statements are reported using the current financial resources measurement <br />focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both <br />measurable and available. Revenues are considered to be available when they are collectible within the <br />current period or soon enough thereafter to pay liabilities of the current period. For this purpose the <br />government considers revenues to be available if they are collected within 60 days of the end of the <br />current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual <br />accounting. However, debt service expenditures, as well as expenditures related to compensated absences <br />and claims and judgments, are recorded only when payment is due. <br />General property taxes are recorded as receivables when levied and as revenue in the period for which <br />they were levied and become available. Property taxes receivables have been recorded as deferred <br />revenues at year-end. Property taxes collected within 60 days subsequent to September 30, 2012, have not <br />been recorded as revenue as the amount is not considered material. Franchise taxes and sales taxes <br />relating to underlying transactions that occurred prior to September 30, 2012, have been recorded as <br />receivables and revenue. Licenses and permits, and fines and forfeitures are not susceptible to accrual <br />since they are not measurable until received. Revenue on federal and state cost-reimbursement grants is <br />accrued when the related expenditures are incurred. Interest is recorded when earned. <br />The City reports the following major governmental funds: <br />TheGeneral Fund is used to account for all financial transactions that are not accounted for in another <br />fund. The principal sources of revenue of the General Fund are property taxes, sales and use taxes, <br />franchise taxes, licenses and permits, and fines and forfeitures. Expenditures are for general government, <br />public safety, public works and other community services. <br />TheDebt Service Fund is used to account for the payment of interest and principal on all general long- <br />term debt of the City except for capital leases which are accounted for in the General Fund. The primary <br />source of revenue for the Debt Service Fund is general property taxes. <br />TheCapital Improvements Fund is used to account for projects that are generally small in nature and <br />affect the general operation of the City. <br />27 <br /> <br />