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The statement that capital assets are included in proprietary funds and fiduciary funds is accurate. Proprietary funds, which encompass enterprise and internal service funds, are designed to report on a government’s business-like activities. This means they follow accounting practices similar to private sector businesses, where capital assets are recognized and reported on the financial statements.

Fiduciary funds manage resources that the government holds in a trustee or agency capacity for others but do not have a financial interest. In these cases, capital assets may also be present and reported as necessary because fiduciary funds can hold assets that are not owned by the government itself but are still essential in fulfilling the obligations of the fund.

In contrast, capital assets are generally not reported in the governmental fund level financial statements, which follow a modified accrual basis of accounting and do not include capital assets on the balance sheet to the same extent as proprietary funds. The reporting of capital assets at historical cost is common and aligns with accounting standards, but it does not specifically pertain to proprietary or fiduciary funds. Lastly, while capital assets may impact the general fund indirectly through expenditures or transfers, they are not typically recognized or detailed directly in general fund financial statements.