AFSB 151 - Understanding Surety Bond
Basics Questions with Complete Solutions
Liquidated damages A reasonable estimation of actual damages, agreed to by contracting
parties and included in the contract, to be paid in the event of a breach or for negligence.
Generally accepted accounting principles (GAAP) A common set of accounting standards and
procedures used in the preparation of financial statements to ensure consistency of presentation
and reported results.
Consideration Something of value or bargained for and exchanged by the parties to a
contract.
Trade discounts and allowances Reductions from the stated purchase price, given by the
supplier, for such reasons as purchasing in bulk or paying in a timely manner.
Remit on receipt of invoice (ROI) A credit arrangement that extends credit to the buyer until
the buyer is invoiced.
, On consignment A credit arrangement in which one party ships merchandise to another party
that acts as the consignor's agent in selling the goods to others.
Floor plan loan Financing for the purchase price of goods for resale to third parties.
Uniform Commercial Code (UCC) A model code that has been adopted in whole or in part by
each state and whose purpose is to provide a consistent legal basis for business transactions
throughout the United States and its territories.
Financing statement (UCC filing) The filed public notice to perfect, or legally establish, a
creditor's rights under the Uniform Commercial Code Section (UCC).
Chapter 11 The general reorganization chapter of the federal Bankruptcy Act under which a
bankrupt partnership or corporation can continue doing business but must set up a plan for
paying a portion, or possibly all, of the creditors of the ongoing business.
Bankruptcy Reform Act of 1978 Legislation that defines creditors' rights and provides relief
to debtors who, with or without fault, have contracted debts beyond the ability to pay.
Basics Questions with Complete Solutions
Liquidated damages A reasonable estimation of actual damages, agreed to by contracting
parties and included in the contract, to be paid in the event of a breach or for negligence.
Generally accepted accounting principles (GAAP) A common set of accounting standards and
procedures used in the preparation of financial statements to ensure consistency of presentation
and reported results.
Consideration Something of value or bargained for and exchanged by the parties to a
contract.
Trade discounts and allowances Reductions from the stated purchase price, given by the
supplier, for such reasons as purchasing in bulk or paying in a timely manner.
Remit on receipt of invoice (ROI) A credit arrangement that extends credit to the buyer until
the buyer is invoiced.
, On consignment A credit arrangement in which one party ships merchandise to another party
that acts as the consignor's agent in selling the goods to others.
Floor plan loan Financing for the purchase price of goods for resale to third parties.
Uniform Commercial Code (UCC) A model code that has been adopted in whole or in part by
each state and whose purpose is to provide a consistent legal basis for business transactions
throughout the United States and its territories.
Financing statement (UCC filing) The filed public notice to perfect, or legally establish, a
creditor's rights under the Uniform Commercial Code Section (UCC).
Chapter 11 The general reorganization chapter of the federal Bankruptcy Act under which a
bankrupt partnership or corporation can continue doing business but must set up a plan for
paying a portion, or possibly all, of the creditors of the ongoing business.
Bankruptcy Reform Act of 1978 Legislation that defines creditors' rights and provides relief
to debtors who, with or without fault, have contracted debts beyond the ability to pay.
