Which of the following items should be accounted for in an enterprise fund?

• A. Equipment for electric power to residents
• B. Light poles to be paid by property owners
• C. Van to transport supplies
• D. General administration building funded by taxes

Answer: (A)

Enterprise funds are used for services that operate like a private business and are financed primarily through charges to external users. The equipment for delivering electric power to residents fits this pattern because the utility provides a service to customers who pay fees for use. The asset becomes part of the utility’s capital assets and is depreciated, with the operating revenues from customers intended to cover the costs.

The other items don’t fit that model. Light poles paid for by property owners are typically funded by assessments or taxes and would be recorded in a capital or tax-supported fund rather than an enterprise fund. A van used to transport supplies is generally an internal-use asset supporting government operations and would belong in an internal service fund or the general fund, not an enterprise fund. A general administration building funded by taxes reflects a tax-supported government function, not a user-charge utility service, so it belongs outside the enterprise fund.