Operating grants are categorized as which type of revenue in proprietary fund statements?

Operating grants in proprietary fund statements are considered nonoperating revenue because they are typically provided to support activities that are not part of the core operating activities of the fund. In proprietary funds, which are used to account for activities similar to private business enterprises, revenue is divided into operating and nonoperating categories.

Operating revenue consists of income derived from the fundamental operations of the business, such as sales of goods and services. Nonoperating revenue, on the other hand, encompasses revenues that do not arise directly from the primary operations. This includes grants, investment income, and contributions. Operating grants, while they do support the entity's operations, do not directly result from the entity's primary source of income, which is why they are classified as nonoperating revenue. This classification helps users of financial statements understand the distinction between routine operational income and revenue that comes from other sources that may not recur consistently.