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SAN LEANDRO REDEVELOPMENT AGENCY Notes to the Financial Statements For the Year Ended June 30, 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Agency's goverimimlal activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs, grants and contributions that are restricted to meeting the operational needs of a particular program and fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Therefore, as defined above, the Agency only has general revenues. Fund Financial Statements: The fund financial statements provide information about the Agency's individual funds. The emphasis of fund financial statements is on major funds, each of which is displayed in a separate column. The Agency considers all its funds to be major funds. C. Basis of Accounting and Measurement Focus The government -wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Agency considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year -end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long -term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Governmental capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of governmental long -term debt are reported as other financing sources. Those revenues susceptible to accrual consist principally of incremental property taxes and interest income. Nonexchange transactions, in which the Agency gives or receives value without directly receiving or giving equal value in exchange, include property taxes. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. D. Use of Restricted[Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the Agency's policy is to apply restricted net assets first. E. Cash and Investment The Agency participates in the City's cash and investment pool which is managed by the City Treasurer. For purposes of reporting cash flows, the Agency considers each fund's share in the cash and investments pool to be cash and cash equivalents. With respect to cash and investments held by fiscal agents, the Agency considers investments with original maturities of three months or less to be cash equivalents Investments income earned on the investment pool is distributed to the appropriate funds based on average month -end balances. 30