AFSB 152 REVIEW QUESTION SET WITH
ACCURATE ANSWERS
◉ C. Forfeiture bond
Answer: William has been asked to underwrite a surety bond for a
construction project with efficiency guarantees. Even though the
contractor seems familiar with the plans and specifications of the
project, and has successfully completed similar projects, William
is still concerned about the efficiency guarantees. Which one of
the following type of bond will limit the surety's exposure to
paying the bond penalty to the obligee?
A. Specific performance bond
B. Indemnity bond
C. Forfeiture bond
D. Payment bond
◉ B. The obligee may forgive a delay or liquidated damages.
Answer: Which one of the following is an advantage of the
takeover option?
A. The surety waives the penal sum of its performance bond as a
defense.
B. The obligee may forgive a delay or liquidated damages.
C. The surety must complete the contract irrespective of cost.
,D. The surety must collect funds from the obligee as the work
progresses.
◉ C. Overbilling of $30,000.
Answer: A contract status report provides costs incurred to date
of $40,000, gross profit recognized to date of $10,000, and billings
to date of $80,000. This reflects an
A. Underbilling of $40,000.
B. Overbilling of $40,000.
C. Overbilling of $30,000.
D. Underbilling of $30,000.
◉ D. $75,000
Answer: Major Office Complex Financial Data
25% Complete Total Contract: Contract price $1,100,000
Estimated price 1,000,000 Estimated gross profit $100,000
Cumulative From Inception: Billings to date $300,000 Costs
incurred to date 250,000 Billings in excess of cost $50,000
Collections to date $200,000 Costs paid to date 125,000
Collections in excess of payments $75,000
Financial Data is shown above for Construction Company's
$1,100,000 contract for its Major Office Complex project. Based on
25 percent completion, what is the recognized/earned gross
profit using the cash accounting method?
, Select one:
A. $0
B. $25,000
C. $50,000
D. $75,000
◉ A. In the private sector, owners and architects often select the
bidders informally from among their friends and acquaintances.
Answer: Contractor Roger Ellis is considering taking his
construction company in a new direction, planning to transition
from working in the public sector to projects in the private sector.
Roger will find that one notable difference between construction
contracts for public work and those for private work is that
A. In the private sector, owners and architects often select the
bidders informally from among their friends and acquaintances
B. Bidders must usually prequalify with the project owner to win
work in the private sector.
C. A sealed competitive bid process is used in most private
projects.
D. Private work is generally bid at a lower price than similar
public work.
ACCURATE ANSWERS
◉ C. Forfeiture bond
Answer: William has been asked to underwrite a surety bond for a
construction project with efficiency guarantees. Even though the
contractor seems familiar with the plans and specifications of the
project, and has successfully completed similar projects, William
is still concerned about the efficiency guarantees. Which one of
the following type of bond will limit the surety's exposure to
paying the bond penalty to the obligee?
A. Specific performance bond
B. Indemnity bond
C. Forfeiture bond
D. Payment bond
◉ B. The obligee may forgive a delay or liquidated damages.
Answer: Which one of the following is an advantage of the
takeover option?
A. The surety waives the penal sum of its performance bond as a
defense.
B. The obligee may forgive a delay or liquidated damages.
C. The surety must complete the contract irrespective of cost.
,D. The surety must collect funds from the obligee as the work
progresses.
◉ C. Overbilling of $30,000.
Answer: A contract status report provides costs incurred to date
of $40,000, gross profit recognized to date of $10,000, and billings
to date of $80,000. This reflects an
A. Underbilling of $40,000.
B. Overbilling of $40,000.
C. Overbilling of $30,000.
D. Underbilling of $30,000.
◉ D. $75,000
Answer: Major Office Complex Financial Data
25% Complete Total Contract: Contract price $1,100,000
Estimated price 1,000,000 Estimated gross profit $100,000
Cumulative From Inception: Billings to date $300,000 Costs
incurred to date 250,000 Billings in excess of cost $50,000
Collections to date $200,000 Costs paid to date 125,000
Collections in excess of payments $75,000
Financial Data is shown above for Construction Company's
$1,100,000 contract for its Major Office Complex project. Based on
25 percent completion, what is the recognized/earned gross
profit using the cash accounting method?
, Select one:
A. $0
B. $25,000
C. $50,000
D. $75,000
◉ A. In the private sector, owners and architects often select the
bidders informally from among their friends and acquaintances.
Answer: Contractor Roger Ellis is considering taking his
construction company in a new direction, planning to transition
from working in the public sector to projects in the private sector.
Roger will find that one notable difference between construction
contracts for public work and those for private work is that
A. In the private sector, owners and architects often select the
bidders informally from among their friends and acquaintances
B. Bidders must usually prequalify with the project owner to win
work in the private sector.
C. A sealed competitive bid process is used in most private
projects.
D. Private work is generally bid at a lower price than similar
public work.
