Which consideration helps determine if debt should be reported as a liability of a proprietary fund?

Determining whether debt should be reported as a liability of a proprietary fund involves assessing two key considerations: the relationship of the debt to the fund and the expectation of repayment by that fund.

When examining the first consideration, the debt's relation to the fund means that the debt incurred must be closely associated with the operations of the proprietary fund. A proprietary fund, which typically accounts for business-like activities, must demonstrate that the debt financing is specifically tied to the activities and assets of that fund. This ensures that the financial statements accurately reflect the economic resources utilized in these activities.

The second consideration is the expectation that the debt will be repaid by the fund. This aspect underscores the financial responsibility of the proprietary fund. If the fund is expected to generate the revenue necessary to cover the repayments, it emphasizes the fund's accountability and its ability to manage its financial obligations effectively.

Thus, both considerations are critical in determining the classification of the debt as a liability of a proprietary fund. If the debt is not related to the fund or is unlikely to be repaid by it, then it would not qualify for inclusion in the fund's liabilities. Therefore, both aspects together—relation to the fund and expectation of repayment—make option D the most comprehensive and correct choice