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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 />For the Year Ended September 30, 2012 <br />Amounts reported for governmental activities in the statement of activities (Statement 2) are <br />different because: <br />Net change in fund balances - total governmental funds (Statement 4). <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 depreciation exceeded <br />capital outlays in the current period. <br />The net effect of various miscellaneous transactions involving capital assets (e.g., donations <br />and impairment) is to increase net assets. <br />Revenues in the statement of activities that do not provide current financial resources <br />are not reported as revenues in the funds. <br />Accrued interest reported in the statement of activities does not require the use of current <br />financial resources and, therefore, is not reported as an expenditure in governmental funds. <br />The net change in inventory is a direct adjustment to fund balance in the funds. <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. <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 financial 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 />effect of these differences in the treatment of long-term debt and related items. <br />Change in net assets of governmental activities (Statement 2). <br />The accompanying notes to the financial statements are an integral part of this statement. <br />19 <br />$ 1,082,595 <br />389,489 <br />747,685 <br />(44,607) <br />82,176 <br />18,599 <br />232,832 <br />1,075,230 <br />$ 3,583,999 <br />