B. Governmental Fund Types, Expendable Trust and Agency Funds:
Basis of Accounting:

The accounts of the general, special revenue, debt service, capital projects, expendable trust and agency
funds are maintained and reported using the modified accrual basis of accounting. Under the modified accrual
basis of accounting, revenues are susceptible to accrual and recognized in the financial statements when they
are measurable and available to finance operations during the year or liquidate liabilities existing at the end of
the year. Material revenues susceptible to accrual include federal grants, income, sales and motor vehicle fuel
and excise taxes. Expenditures are recognized when obligations are incurred as a result of receipt of goods and
services. Modifications to the accrual basis of accounting include:

• Interest on long-term obligations reflected in the general long-term debt account group is recognized in
the debt service funds when it becomes payable.

• Inventories of materials and supplies are recorded as expenditures when purchased.

• Obligations for employees' vested annual leave and sick leave are recorded as expenditures when paid.

• Encumbrances, represented by executed and unperformed purchase orders and contracts which are
approved by the Department of Budget and Fiscal Planning, are recorded as reservations of fund
balance as of the end of the fiscal year.

Investments:

Investments are stated at cost, adjusted for amortization of premiums and accretion of discounts, plus
accrued income. Short term investments aggregating $477,640,000 (which approximates market value) at
June 30, 1982, consisting principally of U. S. Government Securities purchased with agreements to resell, are
reported as cash and short term investments in governmental fund types.

Intergovernmental Expenditures:

Expenditures of general and special revenue fund revenues designated for payment to political
subdivisions and bond proceeds granted to political subdivisions and other public organizations are recorded as
intergovernmental expenditures. Direct grants and other payments to, or on behalf of, political subdivisions
are recorded as current expenditures.

Capital Outlays:

Principally all capital expenditures for the acquisition or construction of State general fixed assets are
reported as capital outlays in the capital projects fund.

Designated General Fund Balance:

General fund balance of $36,524,000 at June 30, 1982, representing non-budgeted agency resources, was
designated for specific agency activities and programs.

Expendable Trust Fund Balances:

Fund balances of expendable trust funds are restricted to the purpose of the fund and are reported as fund
balance reserves.

C. Enterprise Funds and Nonexpendable and Pension Trust Funds:
Basis of Accounting:

The accounts of the enterprise funds, nonexpendable trust fund and pension trust fund are maintained
and reported using the accrual basis of accounting.

Investments:

Investments of enterprise funds and the pension trust fund are stated at cost, adjusted for amortization of
premiums and accretion of discounts, plus accrued income. Short term investments aggregating $218,129,000
(which approximates market) at June 30, 1982, consisting principally of U. S. Government Securities
purchased with agreements to resell, are reported as cash and short term investments in the enterprise funds.

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