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(A Component Unit of the City of Paris, Texas) <br />Notes to the Financial Statements (Continued) <br />September 30, 2017 <br />1. SummNy of Significant Accounting Policies, (Continued) <br />D. Measurement Focus and Basis of Accounting (Continued) <br />The financial transactions of PEDC are reported in two individual funds in the combined financial statements <br />using the current financial resources measurement focus and the modified accrual basis of accounting. These <br />funds, are accounted for by providing a separate set of self -balancing accounts that comprise their assets, <br />liabilities, fund equity, revenues, and expenditures. The focus lof the governmental funds,' measurement (in <br />the fund statements column) is upon determination of financial position and changes in financial position <br />(sources, uses, and balances of financial resources) rather than upon net income. P,EDC considers all <br />revenues available if they are collected within sixty days after year end and expenditures are recognized when <br />the related liability is, incurred. <br />E. Budgetary Information <br />Basis of Accounting <br />Annual budgets, are adopted on a basis consistent with generally accepted accounting principles, for <br />the general fund and the debt service fund. <br />2. Excess of Expenditures Over Appropriations <br />For the year ended September 30, 2017, expenditures exceeded appropriations (budget) for <br />personnel expenditures by $6,002. <br />F. Assets, Liabilities, and Fund Balance/Net Position <br />1. Cash and Cash Equivalents <br />Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term <br />investments with original maturities of three months or less from the date of acquisition. <br />2. Investments <br />PE,DC's holds investments in two external investment pools, Texas Class and Lone Star <br />Investments. Both investment pools carry investments at amortized cost, which approximates fair <br />value. Investments are priced daily and compared to the carrying value. If the ratio of the fair value <br />of the portfolio of investments to the carrying value of investments is less than .995 or greater than <br />1.005, the investment pools will sell investment securities, as required, to maintain the ratio at a <br />point between .995 and 1.005. <br />State statutes authorize PE,DC'to invest in obligations of the U.S. Treasury, direct obligations of the <br />State of Texas, other obligations guaranteed or insured by the State of Texas or the United States,, <br />obligations of states and political subdivisions of any state meeting certain rating requirements, <br />certificates of deposit and fully collateralized direct repurchase agreements having a defined <br />termination date. <br />3. Net Position Flow Assumption <br />Sometimes PEDIC will fund outlays for a particular purpose from both restricted (e.g., restricted <br />bond proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted <br />— net position and unrestricted — net position in the goverriment-wide financial statements, a flow <br />assumption must be made about the order in which the resources are considered to be applied. It is <br />