Which of the Following Is True Regarding the Proprietary Fund

question 71

Multiple Choice

Which of the following is true regarding the proprietary fund financial statements?

• A) The Statement of Net Assets (or Balance Sheet) reflects equity as contributed equity and retained earnings.
• B) Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements.
• C) Statements include the Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows.
• D) The Statement of Cash Flows may be prepared using either the direct or indirect methods.

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Definitions:

Machine-Hours

A metric that evaluates output or operational activity by tracking the number of hours that machinery runs.

Direct Labor-Hours

Hours worked by employees directly involved in the production process, these hours are used for calculating the cost of manufacture per product.

Manufacturing Overhead

All manufacturing costs that are not directly related to the production of a product, including indirect materials, indirect labor, and other indirect costs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or jobs, based on a certain activity, such as direct labor hours or machine hours.