What is considered a basic financial statement of a proprietary fund?

A proprietary fund is used within governmental accounting to account for activities financed primarily through user charges. The financial statements generated by these funds reflect the operational performance and provide insights into the financial health of the related activities.

The statement of revenues, expenses, and changes in net assets serves as a comprehensive report that provides information on the income generated and the costs incurred by the proprietary fund throughout the reporting period. This statement captures revenues and expenses, ultimately showing any profit or loss for the fund and detailing how that impacts the net assets. The focus on net assets rather than retained earnings highlights the difference in terminology used in proprietary funds compared to traditional business accounting, where retained earnings are more commonly referenced.

Overall, this financial statement is crucial for evaluating the effectiveness and efficiency of the fund's operations, making the selection the correct answer given its alignment with the standard reporting practices for proprietary funds.