Final answer:
An internal service fund normally does not use budgetary accounts because it operates on a cost-reimbursement basis, similar to private businesses, and is intended to be self-supporting.
Step-by-step explanation:
An internal service fund within state and local government accounting is a type of fund used to account for the financing of goods or services provided by one department to other departments on a cost-reimbursement basis. The student's question asks which budgetary accounts an internal service fund normally uses. The correct answer is 4) An internal service fund normally does not use budgetary accounts. Instead, these funds are intended to be self-supporting, and they use the accrual basis of accounting similar to private businesses, meaning they recognize revenues when earned and expenses when incurred, rather than focusing on when cash is received or spent.
Universal generalizations about state and local government budgets, such as the requirement for approval before spending and the use of taxes to fund services, align with the broader understanding of governmental budgeting. However, internal service funds specifically operate more like private businesses and do not employ traditional budgetary accounts such as Estimated Revenues, Appropriations, or Encumbrances commonly found in governmental budgeting. These concepts are crucial in understanding the financial management within different levels of government, including how they plan, control, and account for public funds.