Unlike internal service funds, it is frequently desirable for enterprise funds to operate at a profit.

Question

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It is frequently desirable for enterprise funds to operate at a profit to provide capital for things like working capital, expansion of physical facilities and retire debt. Governments may find it desirable to use enterprise fund profits to support general government expenditures that would otherwise require increased taxes. Internal service funds account for activities that produce goods or services to be provided to other governmental units on a cost reimbursement basis.

Unlike Internal Service Funds, It Is Frequently Desirable for Enterprise