Which organization or unit would least likely be accounted for by an enterprise fund?

Which organization or unit would least likely be accounted for by an enterprise fund?

• A. A motor pool
• B. A water utility
• C. A municipal electric service
• D. City-owned bus service

Answer: (B)

Enterprise funds are used for activities that operate like a private business and recover costs primarily through charges to external users. They cover services the public directly pays for, such as utilities or transit services that sell to customers outside the government. Internal service funds, on the other hand, account for goods or services provided to other departments within the government on a cost-reimbursement basis, not to external customers. A motor pool fits this internal-service model because it serves internal department needs and allocates costs back to those departments. Water utility, municipal electric service, and city-owned bus service are typical external-facing activities that governments charge users for, making them common examples of enterprise fund activities. Thus, the organization least likely to be accounted for by an enterprise fund is the motor pool, since it is typically handled in an internal service fund rather than as a business-type enterprise. Water utility would normally be an enterprise fund.

Enterprise funds are used for activities that operate like a private business and recover costs primarily through charges to external users. They cover services the public directly pays for, such as utilities or transit services that sell to customers outside the government.

Internal service funds, on the other hand, account for goods or services provided to other departments within the government on a cost-reimbursement basis, not to external customers. A motor pool fits this internal-service model because it serves internal department needs and allocates costs back to those departments.

Water utility, municipal electric service, and city-owned bus service are typical external-facing activities that governments charge users for, making them common examples of enterprise fund activities.

Thus, the organization least likely to be accounted for by an enterprise fund is the motor pool, since it is typically handled in an internal service fund rather than as a business-type enterprise. Water utility would normally be an enterprise fund.