Final answer:
The two proprietary fund types are Internal service funds and Enterprise funds, which are used by government entities and are accounted for in a manner similar to private business operations.
Step-by-step explanation:
The two proprietary fund types are (1) Internal service funds and (3) Enterprise funds. Therefore, the correct answer to the question of what the two proprietary fund types are is C. 1 and 3. Proprietary funds are used by government entities to account for activities that are similar to private business operations, where the calculation of net income is necessary or useful to sound financial administration.
Internal service funds are used to account for the financing of goods or 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. An example of this would be a central government garage that services all city-owned vehicles.
Enterprise funds are used for services provided to the public on a user charge basis, such as utilities and public transport systems. An example of an enterprise fund could be a city-owned water utility.