Page 1 of 100
Massachusetts Governmental Accounting ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS LATEST
UPDATE THIS YEAR
Exam Domains & Coverage
The CGA examination tests two main areas :
Approximate
Domain Key Topics
%
Practical (Accounting) Governmental accounting principles, fund accounting, financi
50%
Examination reporting, budgeting, auditing
Massachusetts General Laws (MGL) related to municipal finan
Legal Examination 50%
procurement, taxation, public records
Part 1: Practical (Accounting) Examination
A. Fund Accounting Fundamentals
1. What is the primary difference between governmental accounting and for-profit
accounting?
• A. Governmental accounting uses cash basis only
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• B. Governmental accounting focuses on fund accounting and budgetary compliance
• C. For-profit accounting uses modified accrual
• D. There is no difference
Answer: B
Rationale: Governmental accounting emphasizes fund accounting to track specific revenue
sources and uses, along with budgetary compliance, unlike for-profit accounting which focuses
on profitability.
2. Which basis of accounting is used for governmental funds?
• A. Cash basis
• B. Full accrual basis
• C. Modified accrual basis
• D. Tax basis
Answer: C
Rationale: Governmental funds use modified accrual accounting, where revenues are recognized
when measurable and available, and expenditures are recognized when the liability is incurred.
3. Which basis of accounting is used for proprietary funds (enterprise and internal service
funds)?
• A. Cash basis
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• B. Full accrual basis
• C. Modified accrual basis
• D. Budgetary basis
Answer: B
Rationale: Proprietary funds use full accrual accounting, similar to for-profit businesses,
recognizing revenues when earned and expenses when incurred.
4. Which of the following is a governmental fund?
• A. Enterprise Fund
• B. Internal Service Fund
• C. General Fund
• D. Pension Trust Fund
Answer: C
Rationale: The General Fund is a governmental fund. Enterprise and Internal Service Funds are
proprietary funds. Pension Trust Funds are fiduciary funds.
5. What is the purpose of the General Fund?
• A. To account for services provided to other government departments
• B. To account for all financial resources not required to be accounted for in another fund
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• C. To account for business-like activities
• D. To account for pension obligations
Answer: B
Rationale: The General Fund is the primary operating fund, accounting for all resources not
legally or administratively required to be in another fund.
6. What type of fund accounts for activities where fees are charged to external users (e.g.,
water utilities)?
• A. General Fund
• B. Internal Service Fund
• C. Enterprise Fund
• D. Special Revenue Fund
Answer: C
Rationale: Enterprise funds account for services provided to the public on a fee-for-service basis,
such as utilities, parking, or golf courses.
7. Internal Service Funds account for:
• A. Services provided to the general public
• B. Services provided to other departments within the government
Massachusetts Governmental Accounting ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS LATEST
UPDATE THIS YEAR
Exam Domains & Coverage
The CGA examination tests two main areas :
Approximate
Domain Key Topics
%
Practical (Accounting) Governmental accounting principles, fund accounting, financi
50%
Examination reporting, budgeting, auditing
Massachusetts General Laws (MGL) related to municipal finan
Legal Examination 50%
procurement, taxation, public records
Part 1: Practical (Accounting) Examination
A. Fund Accounting Fundamentals
1. What is the primary difference between governmental accounting and for-profit
accounting?
• A. Governmental accounting uses cash basis only
, Page 2 of 100
• B. Governmental accounting focuses on fund accounting and budgetary compliance
• C. For-profit accounting uses modified accrual
• D. There is no difference
Answer: B
Rationale: Governmental accounting emphasizes fund accounting to track specific revenue
sources and uses, along with budgetary compliance, unlike for-profit accounting which focuses
on profitability.
2. Which basis of accounting is used for governmental funds?
• A. Cash basis
• B. Full accrual basis
• C. Modified accrual basis
• D. Tax basis
Answer: C
Rationale: Governmental funds use modified accrual accounting, where revenues are recognized
when measurable and available, and expenditures are recognized when the liability is incurred.
3. Which basis of accounting is used for proprietary funds (enterprise and internal service
funds)?
• A. Cash basis
, Page 3 of 100
• B. Full accrual basis
• C. Modified accrual basis
• D. Budgetary basis
Answer: B
Rationale: Proprietary funds use full accrual accounting, similar to for-profit businesses,
recognizing revenues when earned and expenses when incurred.
4. Which of the following is a governmental fund?
• A. Enterprise Fund
• B. Internal Service Fund
• C. General Fund
• D. Pension Trust Fund
Answer: C
Rationale: The General Fund is a governmental fund. Enterprise and Internal Service Funds are
proprietary funds. Pension Trust Funds are fiduciary funds.
5. What is the purpose of the General Fund?
• A. To account for services provided to other government departments
• B. To account for all financial resources not required to be accounted for in another fund
, Page 4 of 100
• C. To account for business-like activities
• D. To account for pension obligations
Answer: B
Rationale: The General Fund is the primary operating fund, accounting for all resources not
legally or administratively required to be in another fund.
6. What type of fund accounts for activities where fees are charged to external users (e.g.,
water utilities)?
• A. General Fund
• B. Internal Service Fund
• C. Enterprise Fund
• D. Special Revenue Fund
Answer: C
Rationale: Enterprise funds account for services provided to the public on a fee-for-service basis,
such as utilities, parking, or golf courses.
7. Internal Service Funds account for:
• A. Services provided to the general public
• B. Services provided to other departments within the government
