Question

Which of the following is not true regarding proprietary funds?

1) The difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources of proprietary funds is called 'net assets.'
2) Proprietary funds record long-term debt directly in the fund accounts.
3) Proprietary funds record capital assets directly in the fund accounts.
4) Proprietary funds present a statement of cash flows.

Answer 1

Proprietary funds do not present a statement of cash flows, but do record long-term debt and capital assets directly in the fund accounts.

Step-by-step explanation:

Regarding proprietary funds, the statement that is not true is option 4) Proprietary funds do not present a statement of cash flows. Proprietary funds are used to account for activities that are similar to those of a commercial business, such as operating utilities or parking garages. These funds do record long-term debt directly in the fund accounts and also record capital assets directly in the fund accounts. However, they do not typically present a statement of cash flows, as this is not a standard requirement for proprietary funds.