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<br /> 17,4 Þ H <br /> City of San Marcos, Texas <br /> Exhibit 6 <br /> Notes to General Purpose Financial Statements (continued) <br /> September 30, 1992 <br /> 1. Significant Accounting Policies (continued) <br /> Budgets are prepared and adopted on a basis consistent with generally accepted <br /> accounting principles (GAAP) with the exception of the Enterprise Funds. Budgets used <br /> for managerial control have been prepared for the Enterprise Funds on a non-GAAP <br /> basis, which excludes depreciation but includes capital outlay and total debt service. <br /> Unexpended appropriations lapse at the end of the fiscal year. Encumbrances outstanding <br /> at year-end consist primarily of commitments for capital outlays as discussed in Note 5. <br /> The City plans to honor such outstanding encumbrances by inclusion in the budget for the <br /> following year. <br /> Encumbrances <br /> Encumbrance accounting, under which purchase orders. contracts, and' other <br /> commitments for the expenditure of monies are recorded in order to~ reserve that portion <br /> of the applicable appropriation, is employed as an extension of fonnal budgetary <br /> integration in the General Fund, Special Revenue Funds, Capital Projects Funds, and <br /> Enterprise Funds. Encumbrances do not constitUte expenditUres or liabilities. <br /> Cash Equivalents <br /> For purposes of the statement of cash flows, the City considers cash, certificates of <br /> deposit, investment securities with a maturity at date of purchase of three months or less, <br /> and money market accounts to be cash equivalents. <br /> In vest men ts <br /> StatUtes authorize the City to invest in obligations of the U.S. Treasury or its agencies and <br /> instrumentalities, obligations of the State or its agencies, other investments guaranteed by <br /> the U.S. Treasury or the state of Texas, or investments rated by a national rating company <br /> at "A" or better. The City is also authorized to invest in certificates of deposit issued by <br /> banks domiciled in Texas that are FDIC insured or have securities (of aforementioned <br /> quality) pledged to secure these deposits, fully collateralized repurchase agreements, and <br /> local government investment pools. The investment of idle funds has been restricted <br /> exclusively to U.S. Treasury securities and time deposits with the City's depository <br /> -18- <br />