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6.1 B Page 55 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Basis of Accounting The government-wide and proprietary fund financial statements are reported using the economic resources meosurement 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 City considers all revenues reported in the governmental funds to be available if the revenues are collected within 90 days after year-end. The City's fiduciary funds are agency funds which use the accrual basis of accounting. However, since they are custodial in nature, they do not have a measurement focus. During fiscal year 2004/05, the State of California changed the distribution method of the City's sales tax allocation under a program called the "Triple Flip." Under the "Triple Flip," 25% of the City's share of sales tax is now distributed from property tax receipts, with remittance of the sales tax to the City coinciding with the semiannual collection of property tax receipts from property owners in December and April. To recognize the sales tax revenue earned as of June 30, the City has changed its availability period for sales tax revenue from 90 days after year-end to seven months after year-end. The change in the availability period for sales tax will enable the City to accurately reflect sales tax earned in the reporting period. Due to the cash flow problems of the State of California, a portion of the remittance to the City of the June 2010 gasoline tax revenue has been deferred until April 2011. To reconcile the gasoline tax revenue earned as of June 30` the City has changed its availability period for gasoline tax revenue from 90 days after year-end to ten months after year-end. The change in the availability period for gasoline tax will enable the City to accurately reflect gasoline tax earned in the reporting period. 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. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services. 32