Which is a characteristic feature of proprietary fund reporting?

Proprietary fund reporting is characterized by a focus on operational revenues, which aligns with the nature of proprietary funds as they are intended to operate like private businesses. This means that they emphasize generating revenues through the provision of goods or services, rather than primarily relying on tax revenues or public support.

In proprietary funds, income statements reflect operational activities, demonstrating how well the fund has performed in generating revenue from its ongoing operations, with a keen interest in the operating surplus or deficit. This operational revenue focus is crucial because it provides stakeholders with insight into the financial sustainability and viability of the activities being financed by those funds.

The characteristics of proprietary funds differ from governmental funds in that they allow for more flexibility in reporting, similar to that of a business entity. While aspects such as budget comparisons may be relevant, they are not the defining feature of proprietary fund reporting. Instead, understanding how effectively these funds manage and generate revenues from their services is central to their financial reporting and analysis.