AFSB 152 - Assignment 5 Practice Exam
Which one of the following provides information about a contractor's accounting
policies? - answer Notes to financial statement
Mallard Builders, bonded by Jacobs Surety, is a construction company that chooses a
method for financial reporting that uses an accounting technique that estimates profits
on partially finished construction projects. Which method is Mallard using that is also
one that presents no significant disadvantages to Jacobs regarding its use? - answer
Percentage-of-completion method
Steven of Hammond Bonding Company is reviewing some of the prepared financial
statements for Williams Electrical Contractors. Which one of the following best
describes Steven's level of trust and reliance on some of these various documents? -
answer Williams deems the expense of engaging a CPA to prepare an annual audited
report a justifiable expense.
Which construction accounting method best measures a contractor's financial condition
at a point in time and results achieved on work performed during the year? - answer
Percentage-of-completion method
John is an underwriter with Winslow Surety. He is currently in a position where he
needs verification of an active construction contractor's financial statement. This action
by the surety is - answerImpractical and virtually impossible.
Graymark Construction is using the simple accrual method of construction accounting.
Which one of the following may present a financial reporting problem with this method of
construction accounting? - answerIt does not provide for billing-cost-gross profit
imbalances on some contracts.
Interim financial statements should - answerFollow the format of the annual statement.
The completed-contract method is recommended for construction contractors when -
answerEstimates of contract revenue and costs are not reasonably dependable.
John Marley, the owner of Marley Contracting, regularly depends on practitioners
outside of his organization to help with financial reports that are eventually presented to
Barnard Surety for analysis. Which one of the following statements is correct regarding
the engagement of a licensed public accountant to prepare contractors' financial
statements? - answerThe bond underwriter should assess a licensed public accountant
based on ability to prepare financial statements.
Which one of the following provides information about a contractor's accounting
policies? - answer Notes to financial statement
Mallard Builders, bonded by Jacobs Surety, is a construction company that chooses a
method for financial reporting that uses an accounting technique that estimates profits
on partially finished construction projects. Which method is Mallard using that is also
one that presents no significant disadvantages to Jacobs regarding its use? - answer
Percentage-of-completion method
Steven of Hammond Bonding Company is reviewing some of the prepared financial
statements for Williams Electrical Contractors. Which one of the following best
describes Steven's level of trust and reliance on some of these various documents? -
answer Williams deems the expense of engaging a CPA to prepare an annual audited
report a justifiable expense.
Which construction accounting method best measures a contractor's financial condition
at a point in time and results achieved on work performed during the year? - answer
Percentage-of-completion method
John is an underwriter with Winslow Surety. He is currently in a position where he
needs verification of an active construction contractor's financial statement. This action
by the surety is - answerImpractical and virtually impossible.
Graymark Construction is using the simple accrual method of construction accounting.
Which one of the following may present a financial reporting problem with this method of
construction accounting? - answerIt does not provide for billing-cost-gross profit
imbalances on some contracts.
Interim financial statements should - answerFollow the format of the annual statement.
The completed-contract method is recommended for construction contractors when -
answerEstimates of contract revenue and costs are not reasonably dependable.
John Marley, the owner of Marley Contracting, regularly depends on practitioners
outside of his organization to help with financial reports that are eventually presented to
Barnard Surety for analysis. Which one of the following statements is correct regarding
the engagement of a licensed public accountant to prepare contractors' financial
statements? - answerThe bond underwriter should assess a licensed public accountant
based on ability to prepare financial statements.
