Rule: Cash flows from noncapital financing activities include:

• Proceeds or payments related to borrowing not attributable to the acquisition, construction or improvement of capital assets.

• Cash receipts or payments related to grants or subsidies not attributable to capital purposes.

• Property taxes not designated for capital purposes.

• Cash paid to other funds (other than for interfund services).

Choice "C" is correct. Cash receipts from grants and subsidies used to decrease operating deficits (not used for capital purposes) should be classified as noncapital financing activities in the statement of cash flows of a proprietary fund.Choice "a" is incorrect. Noncapital cash receipts from grants and subsidies are noncapital financing activities. Operating cash flows related to receipts and disbursements related to sales of goods and services, interfund reimbursements, etc.
Choice "d" is incorrect. Noncapital cash receipts from grants and subsidies are noncapital financing activities. Capital and related financing activity is typically associated with cash activities related to acquisition, construction or improvement of capital assets, etc.
Choice "b" is incorrect. Noncapital cash receipts from grants and subsidies are noncapital financing activities. Investing activities include cash receipts and disbursements associated with the purchase and sale of equity or debt securities, etc.