AFSB 152 EXAM REVIEW 2026 FULL
QUESTIONS AND CORRECT SOLUTIONS
◉ Which one of the following provides information about a
contractor's accounting policies?
- Notes to financial statement
- Balance sheet
- Independent auditors' report
- Statement of changes in stockholders' equity
Answer: Notes to financial statement
◉ 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?
- The bond underwriter should not accept financial statements
prepared by a licensed public accountant
- The bond underwriter should assess a licensed public accountant
based on ability to prepare financial statements
- Licensed public accountants are not permitted by states to prepare
contractors' financial statements
,- Licensed public accountants provide the same level of expertise as
bookkeeping services
Answer: The bond underwriter should assess a licensed public
accountant based on ability to prepare financial statements
◉ Which one of the following is an advantage of the simple accrual
method of construction accounting?
- A contractor can influence when revenues are earned and costs are
incurred
- It provides an accurate measure of the results achieved on work
performed during the accounting period
- It provides for imbalances in billing-cost-gross profit relationships
on uncompleted contracts
- Cash requirements to fund income tax payments are easy to plan
Answer: A contractor can influence when revenues are earned and
costs are incurred
◉ Which one of the following is correct about the use of interim
financial statements by bonding company underwriters?
- The benefit is rarely worth the expense for a contractor to provide
interim financial statements
- Bonding underwriters should rely on the annual statement rather
than interim financial statements
- Interim financial statements are important for an informed
underwriting decision
, - Interim financial statements that are dated in the middle of a
month are the most accurate
Answer: Interim financial statements are important for an informed
underwriting decision
◉ Underwriter Henrietta is studying the financial statements of
contractor and client Warner Enterprises. As she performs her
analysis, which one of the following best describes her process and
findings?
- Knowing the bottom line amount on Warner's Income Statement is
enough for a full picture of Warner's results
- Operating activities, investing activities, and financing activities are
terms found on the income statement
- A complete financial statement must include schedules related to
contracts in progress
- Identical bottom line results will indicate commensurate values in
the quality and types of earnings
Answer: A complete financial statement must include schedules
related to contracts in progress
◉ Which one of the following statements is true regarding a
qualitative analysis of a contractor's balance sheet?
- A treasury stock transaction, or "held in treasury," is accounted for
as an increase in stockholders' equity
QUESTIONS AND CORRECT SOLUTIONS
◉ Which one of the following provides information about a
contractor's accounting policies?
- Notes to financial statement
- Balance sheet
- Independent auditors' report
- Statement of changes in stockholders' equity
Answer: Notes to financial statement
◉ 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?
- The bond underwriter should not accept financial statements
prepared by a licensed public accountant
- The bond underwriter should assess a licensed public accountant
based on ability to prepare financial statements
- Licensed public accountants are not permitted by states to prepare
contractors' financial statements
,- Licensed public accountants provide the same level of expertise as
bookkeeping services
Answer: The bond underwriter should assess a licensed public
accountant based on ability to prepare financial statements
◉ Which one of the following is an advantage of the simple accrual
method of construction accounting?
- A contractor can influence when revenues are earned and costs are
incurred
- It provides an accurate measure of the results achieved on work
performed during the accounting period
- It provides for imbalances in billing-cost-gross profit relationships
on uncompleted contracts
- Cash requirements to fund income tax payments are easy to plan
Answer: A contractor can influence when revenues are earned and
costs are incurred
◉ Which one of the following is correct about the use of interim
financial statements by bonding company underwriters?
- The benefit is rarely worth the expense for a contractor to provide
interim financial statements
- Bonding underwriters should rely on the annual statement rather
than interim financial statements
- Interim financial statements are important for an informed
underwriting decision
, - Interim financial statements that are dated in the middle of a
month are the most accurate
Answer: Interim financial statements are important for an informed
underwriting decision
◉ Underwriter Henrietta is studying the financial statements of
contractor and client Warner Enterprises. As she performs her
analysis, which one of the following best describes her process and
findings?
- Knowing the bottom line amount on Warner's Income Statement is
enough for a full picture of Warner's results
- Operating activities, investing activities, and financing activities are
terms found on the income statement
- A complete financial statement must include schedules related to
contracts in progress
- Identical bottom line results will indicate commensurate values in
the quality and types of earnings
Answer: A complete financial statement must include schedules
related to contracts in progress
◉ Which one of the following statements is true regarding a
qualitative analysis of a contractor's balance sheet?
- A treasury stock transaction, or "held in treasury," is accounted for
as an increase in stockholders' equity
