The two types of proprietary funds are:-

1) Enterprise funds - It is used to account the activity for which fee is charged to external users of goods or services. Activities are reported as enterprise funds in principal revenue sources, if the following criteria is met

i) The pricing policies of establish fees and charges design to recover the costs including capital costs like depreciation.

ii) Laws or regulations require activity cost of providing service including capital costs such as debt service to be recovered with fees and charges, rather than taxes.

iii) The activity is finances with debt which is secured only by pledge of net revenues from fees and charges of activity.

2) Internal service funds - It is used to account the provision of goods or services by one agency to other departments of the state, other governmental units on a cost reimbursement basis. Internal service funds should be used only if state is predominant participant in the activity.

In what sutation would these type of fund be used?