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Massachusetts Governmental Accounting Exam
COMPLETE QUESTIONS AND DETAILED SOLUTIONS
LATEST UPDATE THIS YEAR-JUST RELEASED
Massachusetts Governmental Accounting Exam, each with an answer and a summarized rationale. The
questions are preceded by a bullet-point summary of exam coverage areas.
SUMMARIZED EXAM COVERAGE (Relevant & Accurate)
• Budgetary accounting and legal compliance (GAAFR, MGL Chapter 44)
• Fund structure: Governmental (General, Special Revenue, Capital Projects, Debt Service,
Permanent), Proprietary (Enterprise, Internal Service), Fiduciary (Custodial, Trust)
• Modified accrual vs. full accrual accounting
• Revenue recognition: available and measurable (MA specific: property tax levy limit, Proposition
2½)
• Encumbrance accounting and lapse of appropriations
• MA specific: Cherry Sheet receipts (local receipts, state aid), budgetary fund balance,
stabilization funds
• Recording debt: bond anticipation notes (BANs), general obligation bonds, premium/discount
• Capital assets and infrastructure (depreciation vs. modified approach)
• Interfund activity (transfers, loans, services)
• MA Open Meeting Law and Public Records Law impact on fiscal reporting
• CAFR components (MD&A, fund financials, government-wide financials, notes, RSI)
• Reconciliation of government-wide and fund financial statements
• Other post-employment benefits (OPEB) and pension reporting (GASB 68/75)
• Special education reimbursements and grant accounting (MA DESE)
• Proprietary funds: pricing, cost allocation, operating vs. nonoperating revenue
• Fiduciary funds: agency funds (tax title, payroll withholdings), investment trusts
• Pollution remediation, asset retirement obligations (GASB 83, 87, 96 on leases and SBITAs)
1. A Massachusetts town
budgets 500,000forsnowremoval.ByFebruary,500,000forsnowremoval.ByFebruary,450,000 is spent
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and 60,000isencumbered.Howmuchremainsavailableforappropriationlapsepurposes?A)60,000isencumb
ered.Howmuchremainsavailableforappropriationlapsepurposes?A)50,000
B) (10,000)C)10,000)C)0
D) 60,000∗∗Answer:B∗∗∗Rationale:Available=Appropriation–Expenditures–
Encumbrances=60,000∗∗Answer:B∗∗∗Rationale:Available=Appropriation–Expenditures–
Encumbrances=500,000 – 450,000–450,000–60,000 = ($10,000) overexpended.*
2. Under MGL Chapter 44, a city’s appropriation for a capital project must lapse after how many months
unless reauthorized?
A) 6 months
B) 12 months
C) 24 months
D) Never lapses
Answer: C
Rationale: MA law requires capital appropriations to lapse after 24 months unless the project is ongoing
and reauthorized.
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3. A school district receives
a 200,000stategrantforspecialeducation,reimbursableuponexpenditure.Atfiscalyear−end,200,000stategr
antforspecialeducation,reimbursableuponexpenditure.Atfiscalyear−end,150,000 is spent but not yet
reimbursed. What fund should report this receivable?
A) General Fund
B) Special Revenue Fund
C) Agency Fund
D) Internal Service Fund
Answer: B
Rationale: Restricted grant proceeds go to a Special Revenue Fund; the receivable is recognized under
modified accrual when measurable and available.
4. Proposition 2½ limits annual property tax levy growth to what percentage plus new growth?
A) 1.5%
B) 2.5%
C) 3.0%
D) 5.0%
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Answer: B
*Rationale: Proposition 2½ caps levy increase at 2.5% over prior year’s levy, plus new construction/new
growth.*
5. A town issues $5 million in BANs to finance a school construction. How should the BAN proceeds be
recorded in the Capital Projects Fund?
A) Revenue – bond proceeds
B) Other financing source – bond proceeds
C) Deferred inflow – bonds
D) Liability only at government-wide level
Answer: B
Rationale: Under modified accrual, BAN proceeds are an “other financing source” in fund financials, not
revenue.
6. Which financial statement reconciles fund-level to government-wide financials?
A) Statement of net position
B) Statement of activities
C) Balance sheet – governmental funds
Massachusetts Governmental Accounting Exam
COMPLETE QUESTIONS AND DETAILED SOLUTIONS
LATEST UPDATE THIS YEAR-JUST RELEASED
Massachusetts Governmental Accounting Exam, each with an answer and a summarized rationale. The
questions are preceded by a bullet-point summary of exam coverage areas.
SUMMARIZED EXAM COVERAGE (Relevant & Accurate)
• Budgetary accounting and legal compliance (GAAFR, MGL Chapter 44)
• Fund structure: Governmental (General, Special Revenue, Capital Projects, Debt Service,
Permanent), Proprietary (Enterprise, Internal Service), Fiduciary (Custodial, Trust)
• Modified accrual vs. full accrual accounting
• Revenue recognition: available and measurable (MA specific: property tax levy limit, Proposition
2½)
• Encumbrance accounting and lapse of appropriations
• MA specific: Cherry Sheet receipts (local receipts, state aid), budgetary fund balance,
stabilization funds
• Recording debt: bond anticipation notes (BANs), general obligation bonds, premium/discount
• Capital assets and infrastructure (depreciation vs. modified approach)
• Interfund activity (transfers, loans, services)
• MA Open Meeting Law and Public Records Law impact on fiscal reporting
• CAFR components (MD&A, fund financials, government-wide financials, notes, RSI)
• Reconciliation of government-wide and fund financial statements
• Other post-employment benefits (OPEB) and pension reporting (GASB 68/75)
• Special education reimbursements and grant accounting (MA DESE)
• Proprietary funds: pricing, cost allocation, operating vs. nonoperating revenue
• Fiduciary funds: agency funds (tax title, payroll withholdings), investment trusts
• Pollution remediation, asset retirement obligations (GASB 83, 87, 96 on leases and SBITAs)
1. A Massachusetts town
budgets 500,000forsnowremoval.ByFebruary,500,000forsnowremoval.ByFebruary,450,000 is spent
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and 60,000isencumbered.Howmuchremainsavailableforappropriationlapsepurposes?A)60,000isencumb
ered.Howmuchremainsavailableforappropriationlapsepurposes?A)50,000
B) (10,000)C)10,000)C)0
D) 60,000∗∗Answer:B∗∗∗Rationale:Available=Appropriation–Expenditures–
Encumbrances=60,000∗∗Answer:B∗∗∗Rationale:Available=Appropriation–Expenditures–
Encumbrances=500,000 – 450,000–450,000–60,000 = ($10,000) overexpended.*
2. Under MGL Chapter 44, a city’s appropriation for a capital project must lapse after how many months
unless reauthorized?
A) 6 months
B) 12 months
C) 24 months
D) Never lapses
Answer: C
Rationale: MA law requires capital appropriations to lapse after 24 months unless the project is ongoing
and reauthorized.
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3. A school district receives
a 200,000stategrantforspecialeducation,reimbursableuponexpenditure.Atfiscalyear−end,200,000stategr
antforspecialeducation,reimbursableuponexpenditure.Atfiscalyear−end,150,000 is spent but not yet
reimbursed. What fund should report this receivable?
A) General Fund
B) Special Revenue Fund
C) Agency Fund
D) Internal Service Fund
Answer: B
Rationale: Restricted grant proceeds go to a Special Revenue Fund; the receivable is recognized under
modified accrual when measurable and available.
4. Proposition 2½ limits annual property tax levy growth to what percentage plus new growth?
A) 1.5%
B) 2.5%
C) 3.0%
D) 5.0%
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Answer: B
*Rationale: Proposition 2½ caps levy increase at 2.5% over prior year’s levy, plus new construction/new
growth.*
5. A town issues $5 million in BANs to finance a school construction. How should the BAN proceeds be
recorded in the Capital Projects Fund?
A) Revenue – bond proceeds
B) Other financing source – bond proceeds
C) Deferred inflow – bonds
D) Liability only at government-wide level
Answer: B
Rationale: Under modified accrual, BAN proceeds are an “other financing source” in fund financials, not
revenue.
6. Which financial statement reconciles fund-level to government-wide financials?
A) Statement of net position
B) Statement of activities
C) Balance sheet – governmental funds
