Which of the following funds would be most appropriate when accounting for an activity that provides goods or services to the public for a fee that is intended to make the activity self-supporting?

• A. General Fund
• B. Internal Service Fund
• C. Enterprise Fund
• D. Special Revenue Fund

Answer: (C)

When a government operation charges external users a fee to cover its costs and aims to be self-supporting, it belongs in an Enterprise Fund. This fund type is designed for activities that operate like private businesses, funding ongoing operations and capital outlays through user charges to outside customers. The focus is on recovering costs from those external fees, and the financial reporting mirrors private-sector practice with accrual accounting and full cost recovery. This differentiates it from internal service funds, which serve other government departments rather than the public; general funds, which cover broad governmental operations; and special revenue funds, which hold revenues restricted for specific purposes. Examples include utilities or transit systems that are expected to be self-financed from user charges.