Maryland Government Accounting
Technician Certification Exam Practice
Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. Which principle requires government accounting systems to record
transactions only when they are both measurable and relevant to fiscal
decision-making?
A. Matching principle
B. Revenue recognition principle
C. Materiality principle
D. Measurability and relevance principle
This principle ensures that only financial information that can be
reliably measured and is useful for decision-making is recorded in
government accounts, improving transparency and accuracy in
reporting.
2. In governmental accounting, the modified accrual basis is primarily
used for which type of funds?
A. Proprietary funds only
B. Governmental funds only
C. Fiduciary funds only
, D. Private-sector funds only
Modified accrual accounting is applied to governmental funds
because it focuses on current financial resources and recognizes
revenues when they are available and measurable.
3. Which of the following is a primary characteristic of a General Fund?
A. Used for capital projects only
B. Used for debt service exclusively
C. Accounts for general operating activities of government
D. Restricted for external grants only
The General Fund is the main operating fund of a government entity
and is used to account for all resources not required to be reported in
another fund.
4. What is the main purpose of a trial balance in government accounting?
A. To prepare budget forecasts
B. To calculate tax liabilities
C. To verify that debits equal credits in the ledger
D. To authorize expenditures
A trial balance ensures that all recorded transactions are
mathematically balanced, helping detect errors in the ledger system.
5. Which document authorizes the legal spending limits for government
departments?
A. Financial statement
B. Appropriation ordinance or budget
C. Audit report
D. Purchase requisition
An appropriation or approved budget legally limits spending
authority for departments and ensures accountability in public fund
usage.
, 6. Encumbrance accounting is used primarily to:
A. Record revenue collections
B. Reserve funds for future obligations
C. Calculate depreciation
D. Allocate tax rates
Encumbrance accounting helps governments control spending by
reserving funds when commitments such as purchase orders are
made.
7. Which fund type accounts for resources that are restricted for specific
external purposes?
A. General Fund
B. Internal Service Fund
C. Special Revenue Fund
D. Debt Service Fund
Special Revenue Funds are used to account for resources restricted by
law or external donors for specific governmental purposes.
8. The chart of accounts in government accounting is used to:
A. Prepare payroll checks
B. Calculate tax rates
C. Classify and organize financial transactions systematically
D. Approve capital projects
A chart of accounts provides a structured coding system that
categorizes all financial transactions for accurate reporting.
9. Which financial statement shows inflows and outflows of cash in
government accounting?
A. Statement of net position
B. Statement of revenues
C. Statement of cash flows
D. Balance sheet only
Technician Certification Exam Practice
Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. Which principle requires government accounting systems to record
transactions only when they are both measurable and relevant to fiscal
decision-making?
A. Matching principle
B. Revenue recognition principle
C. Materiality principle
D. Measurability and relevance principle
This principle ensures that only financial information that can be
reliably measured and is useful for decision-making is recorded in
government accounts, improving transparency and accuracy in
reporting.
2. In governmental accounting, the modified accrual basis is primarily
used for which type of funds?
A. Proprietary funds only
B. Governmental funds only
C. Fiduciary funds only
, D. Private-sector funds only
Modified accrual accounting is applied to governmental funds
because it focuses on current financial resources and recognizes
revenues when they are available and measurable.
3. Which of the following is a primary characteristic of a General Fund?
A. Used for capital projects only
B. Used for debt service exclusively
C. Accounts for general operating activities of government
D. Restricted for external grants only
The General Fund is the main operating fund of a government entity
and is used to account for all resources not required to be reported in
another fund.
4. What is the main purpose of a trial balance in government accounting?
A. To prepare budget forecasts
B. To calculate tax liabilities
C. To verify that debits equal credits in the ledger
D. To authorize expenditures
A trial balance ensures that all recorded transactions are
mathematically balanced, helping detect errors in the ledger system.
5. Which document authorizes the legal spending limits for government
departments?
A. Financial statement
B. Appropriation ordinance or budget
C. Audit report
D. Purchase requisition
An appropriation or approved budget legally limits spending
authority for departments and ensures accountability in public fund
usage.
, 6. Encumbrance accounting is used primarily to:
A. Record revenue collections
B. Reserve funds for future obligations
C. Calculate depreciation
D. Allocate tax rates
Encumbrance accounting helps governments control spending by
reserving funds when commitments such as purchase orders are
made.
7. Which fund type accounts for resources that are restricted for specific
external purposes?
A. General Fund
B. Internal Service Fund
C. Special Revenue Fund
D. Debt Service Fund
Special Revenue Funds are used to account for resources restricted by
law or external donors for specific governmental purposes.
8. The chart of accounts in government accounting is used to:
A. Prepare payroll checks
B. Calculate tax rates
C. Classify and organize financial transactions systematically
D. Approve capital projects
A chart of accounts provides a structured coding system that
categorizes all financial transactions for accurate reporting.
9. Which financial statement shows inflows and outflows of cash in
government accounting?
A. Statement of net position
B. Statement of revenues
C. Statement of cash flows
D. Balance sheet only
