A self-insurance activity that is accounted for in an Internal Service Fund pays $365,000 in claims during the year. Because the Internal Service Fund is a proprietary fund, the claims will be reported on the statement of revenues, expenses, and change in net position as

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Claims paid in an Internal Service Fund are considered an operating expense since the fund's purpose is to provide goods or services primarily to other departments of the government on a cost-reimbursement basis, and the claims paid are directly related to the provision of those services. Nonoperating expenses are typically unrelated to the fund's primary activities, while contra-revenue accounts reduce revenues rather than being expenses. Other financing uses refer to transactions that affect the fund's financing sources and uses, such as borrowing or using reserves.

A Self-Insurance Activity That Is Accounted for in an Internal