QUESTION 1 Which of the following statements is true regarding proprietary funds? 0 A. The purchase of a capital asset is recorded as an expenditure in proprietary funds. O B. Accruals and deferrals common to business accounting are recorded in proprietary funds. ° C. Proprietary funds use the modified accrual basis of accounting. OD. GASB standards require budget-actual reporting for proprietary funds. Solution B.Accruals and deferrals common to business accounting are recorded in proprietary funds. C. Internal Service Funds C.Statement of Revenues, Expenses and Changes in Fund Net Position, Statement of Net Position and Statement of Cash Flows C. Net Investment in Capital Assets, Restricted Net Position and unrestricted Net Position B. Net resources whose use is restricted by creditors, grantors or laws or regulations of other governments. D.The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds. C. Operating, investing, capital and related financing and noncapital related financing B.Internal Service Fund C. Enterprise Fund C. Capital contributions to the enterprise fund..

1. QUESTION 1 Which of the following statements is true regarding proprietary funds? 0 A. The
purchase of a capital asset is recorded as an expenditure in proprietary funds. O B. Accruals and
deferrals common to business accounting are recorded in proprietary funds. ° C. Proprietary
funds use the modified accrual basis of accounting. OD. GASB standards require budget-actual
reporting for proprietary funds.
Solution
B.Accruals and deferrals common to business accounting are recorded in proprietary funds. C.
Internal Service Funds C.Statement of Revenues, Expenses and Changes in Fund Net Position,
Statement of Net Position and Statement of Cash Flows C. Net Investment in Capital Assets,
Restricted Net Position and unrestricted Net Position B. Net resources whose use is restricted by
creditors, grantors or laws or regulations of other governments. D.The operation of internal
service funds has no impact on other funds because it is run as a business and provides services
that would have been purchased elsewhere by the other funds. C. Operating, investing, capital
and related financing and noncapital related financing B.Internal Service Fund C. Enterprise
Fund C. Capital contributions to the enterprise fund.