Enterprise accounting enables a community to operate a self-supported service and demonstrate to the public the true cost of providing a utility, health care, recreational or transportation services the service. Enterprise accounting allows a community to recover all direct (salaries, expenses, debt and capital) and indirect (insurance, fringe benefits, and support of other departments) costs. Enterprise accounting will also enable the community to legally retain a fund balance surplus from year to year, the use of which will be restricted to current operating or future capital/debt costs of the service.
A community may choose to adopt an enterprise fund for two main reasons. One reason is that the community wants to demonstrate to the public which portion of the total costs of a service is recovered through user charges versus the tax levy.