Which fund type is associated with proprietary funds in government accounting?

• A. Governmental Funds
• B. Fiduciary Funds
• C. Enterprise Funds
• D. Internal Service Funds

Answer: (C)

Proprietary funds cover government activities that operate like a business and use accrual accounting to measure economic results. Within this category, there are two fund types: enterprise funds and internal service funds. Enterprise funds are the classic example of proprietary funds and are used to report operations that provide goods or services to the public on a user-charge basis, such as utilities or public transit. Internal service funds also fall under proprietary funds and are used for services provided within the government itself, funded by charges to other departments. Since the question points to the fund type most representative of proprietary funds and typically highlighted as the external-facing, business-type category, enterprise funds is the best match.