Choice "C" is correct. The enterprise fund accounts for a government's for-profit type of operations, which provide goods or services to the general public. Municipal utilities fit this criteria and are therefore recorded in the enterprise fund.Choice "d" is incorrect. Internal service funds are proprietary funds, which service internal users, that is, one department servicing another within the governmental entity. An internal service fund would not be appropriate to account for services provided to external water and sewer customers.Choice "b" is incorrect. Agency funds account for funds held by the governmental entity in an agent capacity. An agency fund would not be appropriate to account for the income determination objectives of operations that provide services to external water and sewer customers.Choice "a" is incorrect. Special revenue funds are governmental funds, which account for the proceeds of special revenue sources that are legally restricted to expenditure for specified purposes (such as the fuel tax for highways). A special revenue fund would not be appropriate to account for services provided to external water and sewer customers.