Which of the following fund types would be used to collect water utility user fees?

Enterprise funds are a type of proprietary fund used by governments to account for operations that are financed and operated in a manner similar to private business enterprises. These include activities like water, sewer, and electricity utilities, where user fees or charges for services are the primary revenue source.

In this case, a water utility charging users is best accounted for using an enterprise fund.

Relevant References:

GASB Codification Section 1300 – Fund Types

GASB Statement No. 34 – Fund Classification

GFOA Best Practices – Utility and Enterprise Fund Accounting

Answer: D. enterprise fund