2004 Annual Comprehensive Financial Report

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Government -wide Statements The government -wide statements report information about the City as a whole using accounting methods similar to those used by private -sector companies. The statement of net assets includes all of the government's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid The two government -wide statements report the City's net assets and how they have changed. Net assets — the difference between the City's assets and liabilities — is one way to measure the City's financial health, or position. • Over time, increases or decreases in the City's net assets are an indicator of whether its financial health is improving or deteriorating, respectively. • To assess the overall health of the City, additional nonfinancial factors need to be considered, such as changes in the City's property tax base and the condition of the City's roads. The government -wide financial statements of the City are divided into two categories: Governmental activities — Most of the City's basic services are included here, such as the police, public works and parks and recreation departments, and general administration, Sales and use taxes, property taxes, and charges for services finance most of these activities. Business -type activities — The City charges fees to customers to recover most of the costs of certain services provided. The City's water and sewer system and golf facilities are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City's most significant funds — not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and spending for particular purposes. • Some funds are required by State law and by bond covenants. • The City Council establishes other funds to control and manage money for particular purposes (like the McCaslin interchange improvement fund) or to show that it is properly using certain taxes and grants (like the Conservation trust — land acquisition fund). The City has two kinds of funds: ▪ Governmental funds — Most of the City's basic services are included in governmental funds, which focus on (1) how cash and other financial assets can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short- term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because this information does not encompass the additional long-term focus of the government -wide 14