California Comprehensive Annual Financial Report - City of Temecula

City of Temecula
Notes to Financial Statements (Continued)
Note 1:
Summary of Significant Accounting Policies (Continued)
Separate financial statements for the government's governmental, proprietary, and
fiduciary funds are presented after the government-wide financial statements. These
statements display information about major funds individually and other governmental
funds in the aggregate for governmental funds.
Fiduciary statements, even though excluded from the government-wide financial
statements includes financial information that primarily represent assets held by the City in
a custodial capacity for other individuals or organizations.
c. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and
fiduciary fund financial statements, excluding agency funds which have no measurement
focus. Under the economic resources measurement focus, all assets and liabilities
(whether current or noncurrent) associated with their activity are included on their balance
sheets. Operating statements present increases (revenues) and decreases (expenses) in
total net assets. Under the accrual basis of accounting, revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Proprietary 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. Nonexchange transactions, in which the City gives (or
receives) value without directly receiving (or giving) equal value in exchange include
grants, entitlements, and donations. Revenue from grants, entitlements, and donations is
recognized in the fiscal year in which all the eligibility requirements have been satisfied.
Operating expenses for proprietary funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenues and expenses
not meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the
government's policy to use restricted resources first, then unrestricted resources as they
are needed.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Under the current
financial resources measurement focus, only current assets and current liabilities are
generally included on their balance sheets. The reported fund balance (net current
assets) is considered to be a measure of "available spendable resources". Governmental
fund operating statements present increases (revenues and other financing sources) and
decreases (expenditures and other financing uses) in net current assets. Accordingly,
they are said to present a summary of sources and uses of "available spendable
resources" during a period. Noncurrent portions of long-term receivables due to
governmental funds are reported on their balance sheets in spite of their spending
measurement focus. However, special reporting treatments are used to indicate that they
should not be considered "available spendable resources" since they do not represent net
current assets. Recognition of governmental fund type revenue represented by
noncurrent receivables is deferred until they become current receivables. Noncurrent
portions of other long-term receivables are offset by fund balance reserve accounts.
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