The Financial Statements of a Proprietary Fund Are Similar to Those

question 38

Multiple Choice

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

• A)proprietary funds do not report income taxes on the operating statement.
• B)proprietary funds do not have paid-in capital or capital stock.
• C)proprietary funds use modified accrual accounting.
• D)both A and B

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Definitions:

Operating Cycle

The duration of time from the purchase of inventory to the collection of cash from sales, reflecting the efficiency of a company's operations.

Cash Flow Time Line

Graphical representation of the operating cycle and the cash cycle.

Cash Cycles

The process that covers the time span between a company’s outlay of cash for materials and the collection of cash from customers for goods or services sold.

Inventory Period

The average length of time items remain in inventory before being sold, indicating the efficiency of a company's inventory management.