C.A.F.R., FY 2011-12 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2012 I. Summary of Significant Accountin� Policies (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Pro�rietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water and sewer enterprise fund are charges to customers for sales and services. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this defnition are reported as nonoperating revenues and expenses. Proprietary funds include the following: The Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the governing body has decided that the determination of revenues earned, costs incurred, and/or net income is necessary for management accountability. D. Assets, Liabilities and Equity 1. Deposits and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from date of acquisition. Statutes authorize the City and PEDC to invest in obligations of the U. S. Treasury, direct obligations of the State of Texas, other obligations guaranteed or insured by the State of Texas or the United States, obligations of states and political subdivisions of any state meeting certain rating requirements, certificates of deposit, and fully collateralized direct repurchase agreements having a defined termination date. The City did not engage in repurchase or reverse repurchase agreement transactions during the current year. Investments are reported in the accompanying balance sheet at fair value (generally based on funded market prices) with changes in fair value being reported as part of investment income. 2. Receivables and Payables Transactions between funds that would be treated as revenues, expenditures, or expenses if the involved organizations were external to the governmental unit (interfund services provided) are accounted for as revenues, expenditures, or expenses in the funds involved. 29