Principally all full-time employees accrue annual leave based on the number of years employed up to a
maximum of 25 days per calendar year. Earned annual leave may be accumulated up to a maximum of 45 days
as of the end of each calendar year. Accumulated earned but unused annual leave for general government
employees is accounted for in the general long-term debt account group. Liabilities for accumulated earned
but unused annual leave applicable to proprietary fund type and the higher education fund are reported in the
respective funds.

Interfund Receivables and Payables:

Interfund receivables and payables consist of the following at June 30, 1987 (amounts expressed
in thousands):

General fund:
Due from:
Special revenue fund ................................................... $ 1,696

Agency funds-
Local admissions and amusement taxes .................................. 1,014

Payroll taxes and fringe benefits ........................................ 1,434

Enterprise fund - Maryland State Lottery .................................. 19,155

$23,299

Due to:
Agency funds -local income taxes ......................................... $82,804

Total Memorandum Only:

The "Total Memorandum Only" column represents an aggregation of the individual combined financial
statements and does not represent consolidated financial information.

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. Such inventories
are not material.

• Obligations for retirement costs and 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.

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.

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