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TOWN OF MASHPEE, MASSACHUSETTS <br /> NOTES TO FINANCIAL STATEMENTS <br /> JUNE 30, 1989 <br /> 3. Long-Tenn Liabilities <br /> The accounting and reporting treatment applied to long-term <br /> 4 liabilities associated with a fund are determined by its measurement <br /> focus. All governmental fund types are accounted for on a spending <br /> "financial flow" measurement focus. This means that only current as- <br /> j sets and current liabilities are generally included on their balance <br /> sheets. Their reported fund balance <br /> (net current assets) is con- <br /> sidered a measure of "available spendable resources". Governmental <br /> fund operating statements present increases (revenues and other <br /> financing sources) and decreases (expenditures and other financing <br /> uses) in net current assets. Accordingly, they are said to present a <br /> summary of sources and uses of "available spendable resources" during <br /> a period. <br /> Long-terra liabilities expected to be financed from governmental funds <br /> are accumulated in the general long-term debt group of accounts. This <br /> account group is not a fund. it is only concerned with the measure- <br /> ment of financial position and, therefore, is not involved with a <br /> measurement of the results from any operations. <br /> 4. Basis of Accounting <br /> Basis of accounting refers to when revenues and expenditures c<r ex- <br /> penses are recognized in the accounts and reported in the financial <br /> statements. Basis of accounting relates to the timing of the measure- <br /> ments made, regardless of the measurement focus applied. <br /> All governmental and expendable trust funds are accounted for using <br /> the modified accrual basis of accounting. Their revenues are recog- <br /> nized when they become measurable and available as net current assets. <br /> All major revenues are susceptible to accrual. <br /> Expenditures are generally recognized under the modified accrual basis <br /> of accounting when the related fund liability is incurred. Exceptions <br /> to this general rule include; (1} accurauiated unpaid vacation, sick <br /> Pay, and other employee amounts which are not accrued; and (2) prin- <br /> cipal and interest on general long-terra debt which is recognized when <br /> due. <br /> 16 <br />