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<br />City of Paris, Texas Statement 5 <br />Reconciliation of the Statement of Revenues, Expenditures and <br />Changes in Fund Balances of Governmental Funds to the Statement of Activities <br />Year Ended September 30, 2005 <br /> <br />Amounts reported for governmental activities in the statement of activities (Statement 2) are <br />different because: <br /> <br />Net change in fund balances - total governmental funds (Statement 4). $ (936,725) <br />Governmental funds reported capital outlays as expenditures. However, in the statement <br />of activities the cost of those assets is allocated over their estimated useful lives and <br />reported as depreciation expense. This is the amount by which capital outlays exceeded <br />depreciation in the current period. 653,614 <br />Revenues in the statement of activities that do not provide current financial resources <br />are not reported as revenues in the funds. 155,911 <br />Accrued interest reported in the statement of activities does not require the use of current <br />fmancial resources and therefore is not reported as an expenditure in governmental funds. 42,411 <br />Transfer from Water and Sewer Fund for assumption of debt. 3,671,157 <br />The net change in inventory is a direct adjustment to fund balance in the funds. (3,091) <br />Some expenses reported in the statement of activities do not require the use of current <br />fmancial resources and, therefore, are not reported as expenditures in governmental funds. (349,863) <br />The issuance of long-term debt (e.g. bonds, leases) provides current fmancial resources <br />to governmental funds, while the repayment of the principal of long-term debt consumes <br />the current fmancial resources of governmental funds. Neither transaction, however, <br />has any effect on net assets. Also, governmental funds report the effect of issuance <br />costs, premium, discounts, and similar items when debt is fIrst issued, whereas these <br />amounts are deferred and amortized in the statement of activities. This amount is the net <br />effort of these differences in the treatment of long-term debt and related items. 1,054,089 <br />Change in net assets of governmental activities (Statement 2). $ 4,287,503 <br /> <br />The accompanying notes to the fmancial statements are an integral part of this statement. <br /> <br />22 <br />