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PARIS -LAMAR COUNTY HEALTH DISTRICT <br />Notes to the Financiai Statements (Continued) <br />September 30,1o16 <br />I. organization and Sunima_ry_of Significant_ Accounting _Poli_ries_(Continued) <br />C. Measurement Focus and Basis of Accounting <br />The accounting and financial reporting treatment is determined by the applicable <br />measurement focus and basis of accounting. Measurement focus indicates the type of <br />resources being measured such as current financial resources or economic resources. The <br />basis of accounting indicates the timing of transaction or events for recognition in the financial <br />statements. <br />The accounts are maintained and the financial statements have been prepared using the <br />accrual basis of accounting in accordance with accounting principles generally accepted in the <br />United States of America (GAAP) as applicable to governments. <br />The basic financial statements focus on the District as a whole. These basic financial <br />statements are designed to emulate corporate presentation models whereby all District <br />activities are consolidated into one total. The District reports all activities as a proprietary fund <br />using the economic resources measurement focus and the accrual basis of accounting. Under <br />this method, revenues are recorded when earned and expenses are recorded at the time the <br />liabilities are incurred. Proprietary funds distinguish operating revenues and expenses from <br />nonoperating items. Operating revenues and expenses generally result from providing <br />services in connection with a proprietary fund's principal ongoing operations. Operating <br />expenses for proprietary funds include the cost of providing services, administrative expenses, <br />and depreciation of capital assets. All revenues and expenses not meeting these definitions <br />are reported as nonoperating revenues and expenses. <br />D. Assets, Liabilities and Net Position <br />i. Cash and Cash Equivalents <br />The District's cash and cash equivalents are considered to be cash on hand, demand <br />deposits, and short -term investments with original maturities of three months or less from <br />the date of acquisition. <br />2. Investments <br />Statutes authorize the District to invest in obligations of the U.S. Treasury, direct <br />obligations of the State of Texas, other obligations guaranteed or insured by the State of <br />Texas or the United States, obligations of states and political subdivisions of any state <br />meeting certain rating requirements, certificates of deposit, and fully collateralized direct <br />repurchase agreements having a defined termination date. <br />3. Prepaid Items <br />Certain payments to vendors reflect costs applicable to future accounting periods and are <br />recorded as prepaid items in the financial statements. The cost of prepaid items is recorded <br />as expenditures /expenses when consumed rather than when purchased. <br />VA <br />