Which of the following is true regarding the proprietary fund financial statements?
A) The Statement of Net Assets (or Balance Sheet) reflects equity as contributed equity and retained earnings
B) Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements
C) Statements include the Statement of Net Assets (or Balance Sheet), Statement of Revenues, Expenses and Changes in Fund Net Assets and Statement of Cash Flows
D) The Statement of Cash Flows may be prepared using either the direct or indirect methods

Question

Quizplus · Accepted Answer

The proprietary fund financial statements include the Statement of Net Assets (or Balance Sheet), Statement of Revenues, Expenses and Changes in Fund Net Assets and Statement of Cash Flows. The other options are incorrect because:

A) The Statement of Net Assets (or Balance Sheet) reflects equity as net position, not as contributed equity and retained earnings.

B) Normally, a reconciliation is required between the government-wide financial statements and the fund financial statements, not just the business-type activities column.

D) The Statement of Cash Flows must be prepared using the direct method for proprietary funds, as required by GASB.

Which of the Following Is True Regarding the Proprietary Fund