City of Weed

BASIS OF ACCOUNTING AND BUDGETING

The basis of accounting refers to the timing of when revenues and expenditures are recognized and reported. The basis of accounting used for purposes of financial reporting in accordance with Generally Accepted Accounting Principles (GAAP) is not necessarily the same basis used in preparing the budget document. Major differences include capital assets, debt, pension liability, and deferred revenue. All items are reconciled annually in the Supplemental Information section of the City’s Annual Comprehensive Financial Report.

The legal level of budgetary control is defined by Section 2.12.070-K of the City of Weed Municipal Code as approved by the City Council.

Governmental Fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred as under accrual accounting.

Proprietary and Fiduciary Fund financial statements, as well as government-wide financial statements, are reported using the economic resources management focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of disbursement of cash.