Final answer:
Accounting and reporting for all proprietary funds of a governmental unit are executed in a business-like manner, focusing on the determination of net income, financial position, and cash flows, similar to private businesses.
Step-by-step explanation:
The orientation of accounting and reporting for all proprietary funds of a governmental unit is similar to that of businesses in the private sector. These funds are used to account for activities that are similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Proprietary funds operate with a focus on the determination of operating income, changes in net assets, financial position, and cash flows.
There are two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report any activity for which a fee is charged to external users for goods or services. Meanwhile, internal service funds are used to account for the financing of services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis.