6.1. ERMUSR 05-11-2004 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER,MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2003 AND 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED The Utilities has the following fund type: Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method,revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. In accordance with the provisions of the Governmental Accounting Standards Board(GASB)Statement No.20,Accounting and Financial Reporting for Proprietary Funds and other Governmental Entities that use Proprietary Fund Accounting,the Utilities applies all applicable GASB pronouncements plus all Financial Accounting Standards Board(FASB)Statements and Interpretations, Accounting Principles Board opinions,and Accounting Research Bulletins issued on or before November 30, 1989,except for those that conflict with or contradict GASB pronouncements. The Utilities has elected not to apply FASB Statements and Interpretations issued after November 30, 1989. Proprietary funds include the following fund type: Enterprise funds account for those operations that are financed and operated in a manner similar to private business or where the Commission has decided that the determination of revenues earned,costs incurred and/or net income is necessary for management accountability. C. Assets,Liabilities and Equity Cash and Cash Equivalents For purposes of reporting cash flows,the Utilities consider all demand, savings and certificates of deposit due within three months or less to be cash and cash equivalents. Accounts Receivable Accounts receivable include amounts billed for services provided before year end. It is the Utilities'policy to charge uncollectibles directly to operations as accounts become worthless. No substantial losses from present receivable balances are anticipated. Interfund Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements Outstanding at the end of the fiscal year are referred to as either"interfund receivables/payables"(i.e.,the current portion of interfund loans)or"advances to/from other funds"(i.e.,the non-current portion of interfund loans). All other outstanding balances between funds are reported as"due to/from other funds". Inventories Inventories are stated at lower of average cost or market on the lust-in, first-out(FIFO)method. Prepaid Items Payments made to vendors for service that will benefit periods beyond December 31,2003 and 2002 are recorded as prepaid expenses. -14-