American Institute of Certified Planners (AICP) Practice Exam

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What is the primary function of an enterprise fund?

To promote urban development
To manage revenues and expenditures of a specific service
To fund educational programs
To support urban planning initiatives

The correct answer is: To manage revenues and expenditures of a specific service

The primary function of an enterprise fund is to manage revenues and expenditures of a specific service. Enterprise funds are established to provide services that are intended to be self-sustaining through user fees and charges, rather than relying on general tax revenues. This allows for more efficient operation and financing of services such as water, sewer, sanitation, and public transportation. By tracking the financial performance related to a specific service, enterprise funds help ensure that the revenue generated covers the operational costs, fostering greater accountability and transparency in public service delivery. This structured financial approach enables municipalities to offer sustainable services while allowing for adjustments based on usage and maintenance needs.