The financial statements of a proprietary fund are similar to those of a business enterprise except for

Question

Quizplus · Accepted Answer

Proprietary funds use accrual accounting similar to that of business enterprises. However, proprietary funds do not report income taxes on the operating statement as they are tax-exempt. Additionally, proprietary funds do not have paid-in capital or capital stock as they are not structured as business corporations. Hence, both options A and B are correct. Proprietary funds utilize modified accrual accounting, which is a method of accounting that recognizes revenues and expenditures when they are measurable and available. However, this statement is not correct as it is not a point of difference between the financial statements of a proprietary fund and a business enterprise.

The Financial Statements of a Proprietary Fund Are Similar to Those