AFSB 152 FINAL STUDY GUIDE 2026
COMPLETE QUESTIONS AND ANSWERS.
◍ Vast majority of small contractors use one method for both tax
reporting and financial reporting. Ans: F
◍ Bid bonds may not contain specific penal sums or bond penalties
(T/F). Ans: T
◍ Through a sharing clause in a construction contract, the ___________
is responsible for cost overruns, and the _________ are responsible cost
underruns. Ans: contractor
owner and contractor
◍ An obligation of the principal in a bid bond that is not a manuscript
bid bond form is that it must.... Ans: furnish performance and payment
bonds with an acceptable surety
◍ Hazardous waste bond underwriters can protect the surety from
exposure to third-party liability outside the protection of the bond
penalty by.... Ans: ensuring that the bond does not require the surety to
finance the principal or to engage a completing contractor
,◍ The three tasks that can determine whether the contractor can
successfully perform the work are.... Ans: estimating, planning, and
managing the work to be performed
◍ So that the underwriter can evaluate the contractor's completed jobs,
work programs, and experience, the principal should provide:. Ans:
Type, size, and location of work
Largest previous backlog
Profitability
◍ Set-aside programs were developed to.... Ans: assist minority-owned,
disadvantaged, or women-owned business enterprises
◍ To escape their obligation to indemnify the surety, the principal and
indemnitors must show that.... Ans: any payments the surety made were
in bad faith
◍ Under a cooperative underwriting arrangement, it is important that the
indemnification be perfected and enforceable under the laws of the....
Ans: parent company's domicile
,◍ _______ is a form used in trend analysis and forecasting that provides
a basis for comparing the as-given and as-allowed amounts related to a
financial statement. Ans: Financial statement analysis
◍ The responsibility for presenting project plans and specifications from
which bidders can readily determine how the project should be built and
its costs is that of the.... Ans: owner and the architect
◍ Items that best characterize the types of statements that interest surety
underwriters are.... Ans: balance sheets
income statements
cash flow statements
supporting notes and schedules for the past three to five years, including
interim statements for the current fiscal year and concurrent statements
for all indemnitors
◍ _________ best describes the reason for a status inquiry. Ans:
Soliciting an architect's comments regarding performance of the work
◍ Surety Bond. Ans: a written contract that expresses one party's
promise to answer for another party's failure to do something as
promised
, ◍ Surety. Ans: the party (usually an insurer) to a surety bond that
guarantees to the obligee that the principal will fulfill an obligation or
perform as required by the underlying contract, permit, or law
◍ Obligee. Ans: the party to a surety bond that receives the surety's
guarantee that the principal will fulfill an obligation or perform as
promised
◍ Principal. Ans: the party to a surety whose obligation or performance
the surety guarantees
◍ Contract bond. Ans: a surety bond guaranteeing the fulfillment of
obligations under construction contracts or other types of contracts
◍ Bid bond. Ans: a contract bond guaranteeing that a contractor bidding
on a construction or supply contract will enter into the contract and will
provide a performance bond if the bid is accepted
◍ Design/build. Ans: a construction method that offers "one-stop
shopping" to property owners for design and construction services
◍ Subcontractor (specialty contractor). Ans: an independent contractor
who specializes in a particular kind of work and who is engaged by a
COMPLETE QUESTIONS AND ANSWERS.
◍ Vast majority of small contractors use one method for both tax
reporting and financial reporting. Ans: F
◍ Bid bonds may not contain specific penal sums or bond penalties
(T/F). Ans: T
◍ Through a sharing clause in a construction contract, the ___________
is responsible for cost overruns, and the _________ are responsible cost
underruns. Ans: contractor
owner and contractor
◍ An obligation of the principal in a bid bond that is not a manuscript
bid bond form is that it must.... Ans: furnish performance and payment
bonds with an acceptable surety
◍ Hazardous waste bond underwriters can protect the surety from
exposure to third-party liability outside the protection of the bond
penalty by.... Ans: ensuring that the bond does not require the surety to
finance the principal or to engage a completing contractor
,◍ The three tasks that can determine whether the contractor can
successfully perform the work are.... Ans: estimating, planning, and
managing the work to be performed
◍ So that the underwriter can evaluate the contractor's completed jobs,
work programs, and experience, the principal should provide:. Ans:
Type, size, and location of work
Largest previous backlog
Profitability
◍ Set-aside programs were developed to.... Ans: assist minority-owned,
disadvantaged, or women-owned business enterprises
◍ To escape their obligation to indemnify the surety, the principal and
indemnitors must show that.... Ans: any payments the surety made were
in bad faith
◍ Under a cooperative underwriting arrangement, it is important that the
indemnification be perfected and enforceable under the laws of the....
Ans: parent company's domicile
,◍ _______ is a form used in trend analysis and forecasting that provides
a basis for comparing the as-given and as-allowed amounts related to a
financial statement. Ans: Financial statement analysis
◍ The responsibility for presenting project plans and specifications from
which bidders can readily determine how the project should be built and
its costs is that of the.... Ans: owner and the architect
◍ Items that best characterize the types of statements that interest surety
underwriters are.... Ans: balance sheets
income statements
cash flow statements
supporting notes and schedules for the past three to five years, including
interim statements for the current fiscal year and concurrent statements
for all indemnitors
◍ _________ best describes the reason for a status inquiry. Ans:
Soliciting an architect's comments regarding performance of the work
◍ Surety Bond. Ans: a written contract that expresses one party's
promise to answer for another party's failure to do something as
promised
, ◍ Surety. Ans: the party (usually an insurer) to a surety bond that
guarantees to the obligee that the principal will fulfill an obligation or
perform as required by the underlying contract, permit, or law
◍ Obligee. Ans: the party to a surety bond that receives the surety's
guarantee that the principal will fulfill an obligation or perform as
promised
◍ Principal. Ans: the party to a surety whose obligation or performance
the surety guarantees
◍ Contract bond. Ans: a surety bond guaranteeing the fulfillment of
obligations under construction contracts or other types of contracts
◍ Bid bond. Ans: a contract bond guaranteeing that a contractor bidding
on a construction or supply contract will enter into the contract and will
provide a performance bond if the bid is accepted
◍ Design/build. Ans: a construction method that offers "one-stop
shopping" to property owners for design and construction services
◍ Subcontractor (specialty contractor). Ans: an independent contractor
who specializes in a particular kind of work and who is engaged by a
