What fund type is utilized when a government collects property taxes on behalf of other governments?

The correct choice is the agency fund, which is used specifically for situations where one government collects money, such as property taxes, on behalf of another entity or government. This type of fund is intended to account for resources that the government holds temporarily as an agent for others and does not influence the accounting for the resources.

In the case of property taxes, when a government collects these taxes, it is acting as an agent for various other entities, including school districts or local governments that will ultimately receive the tax revenue. The agency fund ensures that the collected tax amounts are accurately reflected and managed, but not included in the government’s own financial resources since they belong to others.

Investment trust funds, enterprise funds, and general funds serve different purposes. Investment trust funds manage external investment pools and focus on the investment-related transactions. Enterprise funds are used for services that charge fees, such as utilities, operating like private businesses. General funds are used for the everyday operations of the government, encompassing a wide variety of services, but they do not specifically manage resources held for others, which is the primary purpose of agency funds.