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This discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City of Sulphur's basic financial statements comprise three components: (1) government- wide financial statements, (2) fund financial statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Comparative data is presented when available.

GOVERNMENT-WIDE FINANCIAL STATEMENTS. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlyingevent giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only resuJt in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused employee leave).

Both government-wide financial statements distinguish governmental activities of the City that are principally supported by taxes and intergovernmental revenues from business- type activities that are

intended to recover all or a significant portion of their costs through user fees and governmental activities of the City include general government, public safety and streets. type activities of the City of Sulphur includethe water and sewer systems.

charges. The The business-

The government-wide financial statements are presented on pages 16 through 17 of this report.

FUND FINANCIAL STATEMENTS. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Sulphur,

like other state and local governments, uses finance-related legal requirements. All governmental funds and proprietary funds.

fund accounting to ensure and demonstrate funds of the City can be divided into

compliance with two categories:

Governmental funds.

Governmental funds are used to account for essentially the same functions

reported as governmental activities in the government-wide financial statements. government-wide financial statements, governmental fund financial statements inflows and outflows of spendable resources, as well as on balances of spendable

However, unlike the focus on near-term resources available at

the end of the fiscal year. financing requirements.

Such information may be useful in evaluating a government's near-term

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

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