Proprietary Funds (3)
The statement of revenues, expenses, and changes in net assets for proprietary funds is the operating statement for these funds. In includes the following main categories of activities: operating revenues, operating expenses, and nonoperating revenues and expenses. Operating revenues are listed by the source
of the revenues, which in the case of proprietary funds is usually charges for services. Operating expenses are listed by the main types of expenses incurred by the funds. Sometimes this categorization of expenses is referred to as the natural classification, such as personnel costs, rent, utilities, and so on. (Remember
this is different from the governmental fund statement of revenues, expenditures, and changes in funds balance,in which expenditures are categorized by program, such as public safety, social services, education, etc.) The nonoperating revenues and expenses category includes, generally, investment income
and interest expense. After the total of nonoperating expenses, proprietary funds report any capital contributions that they have received, usually from the governmental funds of the government. Previous to GASBS 34, these capital contributions were added directly to the net assets of proprietary funds. In other words, they did not appear in the calculation of the change in net assets for the year, which many equate to the bottom line of the proprietary fund. Using the GASBS 34 reporting model, these capital contributions, while not considered operating revenues, are included in the calculation of the change in net assets for the year, meaning that they are included in the bottom line of the proprietary fund.
Taken From : Governmental Accounting Made Easy