Final answer:
The correct answer is that Capital Contributions appears in the fund equity section of the Statement of Net Position for a proprietary fund, indicating the resources contributed that are not the result of operations.
Step-by-step explanation:
The Capital Contributions account of a proprietary fund, such as an enterprise fund often found in governmental accounting, is concerned with the resources that have been contributed to the fund, which are not the result of earnings from operations. This account is used when capital assets are contributed to the fund or when infrastructure is financed by outside parties or other funds, such as the general fund, specifically for use by the proprietary fund.
The correct answer to your question is: a. Capital Contributions appears in the fund equity section of the Statement of Net Position. This account reflects the acquisition of capital assets that were not financed through the fund's revenues or expenses. As such, they increase the net position of the fund and are recorded in the equity section, providing a clear picture of the resources that have been invested in the fund that are not subject to repayment, as they are not liabilities.
Option B is incorrect because Capital Contributions are not considered operational revenues or expenses, and hence do not appear on the Statement of Revenues, Expenses, and Changes in Fund Net Position. Option C is also incorrect because billing another fund for services provided is an operational activity and would be recorded as revenue, not a capital contribution.