How should assets and liabilities be presented in the proprietary fund statement of position?

In a proprietary fund statement of position, the classified approach is deemed the most appropriate method for presenting assets and liabilities. This approach involves separating assets and liabilities into current and noncurrent categories. Current assets are resources that are expected to be converted into cash or used up within one year, while noncurrent assets are long-term resources. Similarly, current liabilities are obligations that are expected to be settled within one year, whereas noncurrent liabilities are those due after one year.

Using the classified approach provides a clear and organized way to assess the liquidity and financial health of a proprietary fund. It allows stakeholders to quickly identify which resources are readily available to meet obligations and when liabilities are due, facilitating better understanding and decision-making related to the fund's finances.

The relative order of liquidity approach, while also valid in certain contexts, focuses more on the order in which assets are expected to be converted into cash, which may not provide the clarity of distinctions between current and noncurrent categories that the classified approach offers. The preference for the classified approach highlights its effectiveness in presenting a comprehensive overview of a fund’s financial position, thereby making it the best choice for such presentations.