A municipality would establish an internal service fund to capture the activities of a data...

Comprehensive Detailed Explanation:

Internal service funds are proprietary funds used to account for the operations of departments or functions that provide goods or services to other departments within the same government on a cost-reimbursement basis. Examples include:

Centralized IT/data processing

Fleet management

Print shops or mail centers

These are not used for general public services, capital acquisitions, or restricted revenues (which belong in special revenue or capital projects funds).

Relevant References:

GASB Statement No. 34 – Fund Types

GASB Codification Section 1300 – Internal Service Funds

GFOA Fund Accounting Best Practices

Answer: D. financing of services provided to other governmental units on a cost reimbursement basis.