Final answer:
The true statement regarding the proprietary fund Statement of Cash Flows is that both the direct and indirect methods may be used for preparation, and when the direct method is used, a reconciliation schedule is required.
Step-by-step explanation:
The correct answer is c. Both of the above. According to the standards for proprietary funds, such as those used by government entities, both the direct and indirect methods for preparing the Statement of Cash Flows are acceptable. Moreover, when the direct method is utilized, a separate schedule must be presented that reconciles net income to the cash provided by operating activities, which essentially reports the same information as the indirect method. This requirement is designed to give users of the financial statements a complete understanding of how operating cash flows relate to the entity's operating income.