In preparing Chase City's reconciliation of the Statement of Revenues, Expenditures, and Changes in fund balances to the Government-Wide Statement of Activities, which of the following items should be subtracted from the changes in fund balances?

A. Capital Assets Purchases.

B. Payment of long-term debt principal.

C. Internal Service Fund increase in Net Position.

D. Book value of capital assets sold during the year.

I know the answer is D. Book value of capital assets sold during the year, because the explanation says : At the Governmental-Fund level, the entire proceeds from the sale of capital assets is a financial resource of the fund - it is spendable. Only the gain or loss on the sale of capital assets is reported in the Government-Wide Financial Statements. Therefore, the book value of capital assets should be subtracted.

I don't understand what they mean by this, can please simplify and explain step by step so I can understand?