Question

Which of the following is (are) true regarding the proprietary fund Statement of Revenues, Expenses, and Changes in Fund Net Position?

a. Capital contributions are to be reported separately after non-operating revenues and expenses.
b. Operating expenses may be reported either by function or by object classification.
c. Both of the above.
d. Neither of the above.

Answer 1

Both statements about the proprietary fund Statement of Revenues, Expenses, and Changes in Fund Net Position are true. Capital contributions are reported separately after non-operating revenues and expenses, and operating expenses can be reported by either function or object classification.

Step-by-step explanation:

The student asked which statements are true regarding the proprietary fund Statement of Revenues, Expenses, and Changes in Fund Net Position. The correct answer is c. Both of the above.

Firstly, capital contributions should indeed be reported separately after non-operating revenues and expenses. This is because capital contributions are not the result of the entity’s ongoing, primary operation. Secondly, it is true that operating expenses may be reported either by function (such as public safety or health services) or by object classification (such as salaries and benefits, supplies, etc.). These flexibilities in presentation help stakeholders better understand how the funds are being used.