Texas Military Department Annual Financial Report: 2014 Page: 10
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UNAUDITED
* BASIS OF ACCOUNTING
The basis of accounting determines when revenues and expenditures or expenses are
recognized in the accounts reported in the financial statements. The accounting and
financial reporting treatment applied to a fund is determined by its measurement focus.
Governmental fund types that build the government-wide financial statements are accounted for
using the full accrual method of accounting. This includes capital assets, accumulated
depreciation, unpaid employee compensable leave, and the un-matured debt service (principal and
interest) on general long-term debt liabilities, long-term capital leases, and long-term claims and
judgments. The activity will be recognized in these fund types.
BUDGETS AND BUDGETARY ACCOUNTING
The budget is prepared biennially and represents appropriations authorized by the legislature and
approved by the Governor (The General Appropriations Act). Encumbrance accounting is
employed for budgetary control purposes. Unencumbered appropriations are generally' subject to
lapse 60 days after the end of the fiscal year for which they were appropriated.
ASSETS, LIABILITIES AND FUND BALANCES/NET ASSETS
ASSETS
* Cash and Cash Equivalents
Short-term highly liquid investments with an maturity of three months or less are considered
cash equivalents.
Restricted Assets
Restricted Assets include monies or other resources restricted by legal or contractual requirements.
These assets include revenue bonds and revenues set aside for statutory or contractual
requirements.
Inventories
Consumable inventories include warehouse supplies on hand at year-end. Inventories are valued
at cost, generally utilizing an average cost method. The consumption method of accounting is used
to account for inventories that appear in the governmental fund types.
The cost of these items is expensed when the items are consumed.
Capital Assets
Assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of
one year should be capitalized. These assets are capitalized at cost or, if any purchased, at
appraised fair value as of the date of acquisition. Purchases of assets by governmental funds are
reported as expenditures. Depreciation is reports on all "exhaustive" assets. "Inexhaustible"
assets such as works of art and historical treasures are not depreciated. Assets are depreciated
over the useful life of the asset using the straight-line method.
0
* LIABILITIESAccounts Payable
Accounts Payable represents the liability for the value of assets or services received at the
balance sheet date for which payment is pending.
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Texas Military Department. Texas Military Department Annual Financial Report: 2014, report, Autumn 2014; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth653605/m1/19/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.