A state or local government has the following funds Special revenue fund Pension (and other employee benefit) Enterprise fund Permanent fund Internal service fund Private purpose trust fund Custodial fund How many governmental funds does this entity have?

Sales taxes collected by Harold to be distributed to other governmental units: 500,000 ... A special revenue fund is a governmental fund that accounts for the proceeds of specific revenue sources legally ... A state or local government has the following funds: ... Both proprietary funds (enterprise and internal service) are listed.

Explanation:

The financial statements of governmental funds are prepared on the modified accrual basis of accounting. Under modified accrual accounting, revenues are recognized when they are both measurable and available to finance expenditures of the current period.