Final answer:
State and local governments prepare both entity-wide and fund financial statements to account for their various services and provide an overall financial outlook.
Step-by-step explanation:
The type of entities that prepare both entity-wide and fund financial statements are state and local governments. This is because state and local governments operate with different funds for various services and programs, such as health care, education, and public welfare. Therefore, they prepare fund financial statements to account for the resources allocated to each fund, as well as entity-wide financial statements to provide an overall view of the government's financial position and the results of its operations.