Proprietary funds record unfunded pension obligations as a fund liability.

Question

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Proprietary funds, which include enterprise funds and internal service funds, are used to account for activities that are similar to those activities found in the private sector. These funds are required to record unfunded pension obligations as a liability. This means that the liability will be reflected in the financial statements of the fund, and will be accounted for using generally accepted accounting principles.

Proprietary Funds Record Unfunded Pension Obligations as a Fund Liability