Final answer:
Entities that commonly use fund accounting for internal reporting include government organizations and non-profit organizations, as it helps them manage funds according to specific purposes and regulations.
Step-by-step explanation:
Fund accounting is most commonly used by certain types of entities for internal reporting purposes. These entities include government organizations, non-profit organizations, and other organizations beyond those that exist to make a profit. Fund accounting allows these entities to track and report on funds that have been earmarked for specific purposes, such as grants, donations, or operational goals.
Unlike for-profit businesses that focus on profitability, non-profit organizations, including welfare groups, churches, hospitals, schools, museums, and others, utilize fund accounting to ensure they manage their funds according to their non-profit missions and comply with regulations. For-profit organizations and individuals typically use other accounting methods focused on profit generation and personal finance, respectively.