What measurement focus and basis of accounting do Enterprise Funds use?

Enterprise Funds are designed to account for activities that operate similarly to private businesses, meaning they aim to generate revenue and can cover their costs through user fees. As such, they employ a measurement focus that emphasizes the economic resources of the funds. This means that all assets, liabilities, net position, revenues, and expenses are presented.

The basis of accounting for Enterprise Funds is the accrual basis, which recognizes revenues when earned and expenses when incurred, regardless of the timing of cash flows. This approach provides a more comprehensive view of financial performance and position, as it reflects the total economic resources at the disposal of the fund.

Thus, the correct measurement focus and basis of accounting for Enterprise Funds combine to effectively capture the financial activities and position of these funds in a manner that is consistent with the principles of financial reporting for governmental entities.