Grant Revenues:

Revenues from Federal reimbursement type grants are recorded when the related expenditures are incurred in
the restricted and unrestricted current funds. A portion of the fund balance of the restricted current fund
represents cash received in excess of grant expenditures and is subject to refund to the Federal government if not
expended for its intended purpose.

Student Revenues:

Student tuition and fees are fully recognized as revenues in the fiscal year in which the related courses or
activities are principally conducted. Student tuition and fees applicable to future courses and activities, collected
as of the end of the fiscal year, are recorded as deferred revenue.

Accounts and Notes Receivable:

An allowance for doubtful receivables is provided for estimated losses expected to be incurred in collection.
The estimated losses are based on historical collection experience and a review of the status of year-end
receivables.

Inventories:

Inventories are stated at the lower of cost, using the first-in, first-out method, or market.

Property, Plant and Equipment:

Property, plant and equipment are stated principally at cost as of the date of acquisition or fair value as of the
date of donation in the case of gifts. Consistent with generally accepted accounting principles for governmental
colleges and universities, depreciation expense related to property, plant and equipment is not recorded.

Operating Transfers from, the State:

A substantial portion of the higher education fund's current unrestricted and plant fund expenditures are
funded through appropriations from the State's general fund and capital projects fund, respectively.

E. Component Units, Proprietary Funds:
Basis of Accounting:

Transactions related to the financial activities combined in the proprietary fund type of the component units
are reported similar to other commercial activities of the State using the flow of economic resources measurement
focus and the accrual basis of accounting.

3. Budgeting and Budgetary Control:

The Maryland Constitution requires the Governor to submit to the General Assembly an annual balanced
budget for the following fiscal year. This budget is prepared and adopted for the following five budgetary funds:

General Fund:

The fund in which all general transactions of the State are recorded, unless otherwise directed to be included
in another fund.

Special Fund:

The Special Fund includes the transportation activities of the State, fishery and wildlife funds, shared taxes
and payments of debt service on general obligation bonds. In contrast, the GAAP special revenue funds include
only the operations (other than debt service and pension activities) of the Maryland Department of Transportation
and Maryland Transportation Authority.

Federal Fund:

The Federal Fund accounts for substantially all grants from the Federal government.

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