What is managed with regard to internal service funds as under GAAP?

The correct answer pertains to the management of potential future catastrophe losses in the context of internal service funds under GAAP. Internal service funds are used by governments to provide goods or services to other governmental units on a cost-reimbursement basis. These funds help manage shared resources like insurance and risk management, which can be critical for protecting the organization against unforeseen events.

In this accounting context, managing potential future catastrophe losses involves ensuring that adequate funding and resources are available to cover liabilities arising from such events. This is crucial for maintaining financial stability and meeting potential obligations that could arise from unexpected catastrophes. By effectively managing these risks, governmental entities can assure stakeholders that they are adequately prepared for any future challenges that might impact their financial health.

The other choices do not align with the primary focus of internal service funds regarding anticipatory financial management. While equity capital, capital budgets, and future liabilities are important components of governmental accounting, internal service funds specifically relate to managing risks and ensuring readiness for unexpected financial outlays related to potential catastrophes.