What are typical revenue sources for enterprise funds?

Enterprise funds are used by governmental entities to account for services that operate in a manner similar to private businesses, primarily providing goods or services to the public for a fee. These funds are typically self-sustaining, meaning they should generate enough revenue to cover their costs.

The correct answer highlights the nature of enterprise funds that often derive revenue from both grant revenues and operating revenues. Operating revenues are commonly generated from service fees related to the specific enterprise activities, such as water, sewer, or public transportation services. Grant revenues can supplement these operating revenues, particularly when funding is required for capital projects or specific service initiatives that may enhance the infrastructure or service quality without being directly tied to user payments.

Though other options may include some revenue sources, they do not fully encapsulate the typical revenue generation framework of enterprise funds. Investment income, personal donations, and tax revenues are generally not primary sources for such funds. Instead, reliance on service fees is a critical characteristic of how enterprise funds operate, leading to the importance of recognizing both grant and operating revenues in this context.