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Governmental entities derive their existence and authority from constitutions, statutes, and legal frameworks rather than ownership or capital investment. Their legitimacy flows from the public, through elected representatives, and their activities must adhere to enabling legislation and appropriations. This is a core Exam 1 principle distinguishing the governmental environment. Option A is partially true for some enterprise-type activities (utilities, tolls) but not for governments overall. Option B and D describe private-sector goals: shareholder wealth and profit maximization. Governments instead pursue service objectives, policy implementation, and public accountability, not profit. Recognizing that governments are bound by constitutional and statutory authority is critical to understanding their operations, financial management, and the legal constraints that shape budgeting, reporting, and accountability. Therefore, Option C most directly identifies this distinguishing characteristic emphasized in CGFM exam objectives.