CCIFP _Accounting and Reporting Exam
Questions with Correct Answers
What is the cost-to-cost method used for in construction accounting?
Calculating the percentage of completion
An independent construction audit can contribute to which of the following?
Fraud prevention
Contract Revenue : $1,000,000.00
Estimated Contract cost: $900,000.00
Contract Billings : $750,000.00
Actual contract cost: $700,000.00
What is the CIE/BIE?
$27,778 CIE
What is one of the main objectives of group Captive?
stability
5 test for finance lease ASC 842
Transfer of ownership
Bargain purchase option
economic life test - greater than 75%
economic recovery test-present value
alternate use to lessor - no use to lessor at the end of the lease
Why is the disclosure of allowance for doubtful receivables recommended in financial
statements?
,to provide transparency regarding potential losses from uncollectable receivables
What threshold is used to determine whether renewal periods should be included in the
lease term?
determine whether the renewals are "reasonable certain" to be renewed
Financial statement the details revenue, expenses, profit or losses over a period.
income statement
Goliath construction is nearing the end of a $5,000,000.00 fixed price contract. To date,
they have incurred $4,800,000.00 in costs and estimates an additional $500,000.00 to
complete the project. How should Goliath construction account for the anticipated loss
on this contract?
recognize the entire anticipated loss of $300,000.00($4,800,000.00+$500,000.00 -
$5,000,000.00)
What is the primary financial inference of billing in excess of cost(BIE)?
BIE indicates a liability in the balance sheet
which of the following disclosure requirements is recommended for receivables?
disclosure of retention receivable expected to be collected within one year.
Greenbuild company is seeking a large loan to finance a new sustainable construction
project. the company segregate accounts receivable on completed contracts and provide
disclosures about retention and potential uncollectible amounts.
How does this level of disclosure benefit the banker evaluating Greenbuild's loan
application?
,It provides clearer understanding of Greenbuild's cashflow , collection efficiency, and overall
financial health, enabling a more informed lending decision.
What is a common challenge in Gross profit analysis ?
Managing project delays and cost overruns
ABC company is leasing a new office building. How will it impact the company's
financial ratio, particularly the debt to equity ratio when considering the office lease
under ASC 842?
The inclusion of the lease liability in the balance sheet could increase the debt to equity ratio,
potentially affecting the company's borrowing capacity.
Measure the efficiency of converting direct cost into gross profit
Gross profit margin
Financial statement the details profit retained, dividends paid and capital introduced or
withdrawn
statement of changes in equity
Define an independent construction audit
a comprehensive review of construction project processes and financials conducted by an
independent third party.
JFK is preparing its balance sheet. They have $75,000 in AP to subcon and an $8000 in
retention. How are the amounts presented?
Accounts payable to subcon of $75,000 as a current liabililty and retention payable of $8000
as current liability
, When a construction company uses PCM, how should interest cost related to financed
construction projects be treated?
capitalized as part of the cost of the project when there are significant net expenditures
Which accounting method recognizes revenue and expenses proportionally as the
project progresses?
Percentage of completion method
A subcon has completed work on a project and a GC is holding back 10% of the
contract as retention. What best describes the purpose of this retention?
to protect the owner from non performance or substandard performance
Why is it important to tract Cost in excess of billings?
to prevent underbilling and ensure cash flow stability
What is a common accounting practice for construction companies regarding
equipment during period of low activity?
recording a full year's depreciation only in the months when equipment is typically operated
In accrual accounting for long term construction projects, how are revenues typically
recorded
based on Percentage of completion
First step in the audit process
Planning
Primary purpose of distinguishing between currently due amounts and retention in
recording receivables
Questions with Correct Answers
What is the cost-to-cost method used for in construction accounting?
Calculating the percentage of completion
An independent construction audit can contribute to which of the following?
Fraud prevention
Contract Revenue : $1,000,000.00
Estimated Contract cost: $900,000.00
Contract Billings : $750,000.00
Actual contract cost: $700,000.00
What is the CIE/BIE?
$27,778 CIE
What is one of the main objectives of group Captive?
stability
5 test for finance lease ASC 842
Transfer of ownership
Bargain purchase option
economic life test - greater than 75%
economic recovery test-present value
alternate use to lessor - no use to lessor at the end of the lease
Why is the disclosure of allowance for doubtful receivables recommended in financial
statements?
,to provide transparency regarding potential losses from uncollectable receivables
What threshold is used to determine whether renewal periods should be included in the
lease term?
determine whether the renewals are "reasonable certain" to be renewed
Financial statement the details revenue, expenses, profit or losses over a period.
income statement
Goliath construction is nearing the end of a $5,000,000.00 fixed price contract. To date,
they have incurred $4,800,000.00 in costs and estimates an additional $500,000.00 to
complete the project. How should Goliath construction account for the anticipated loss
on this contract?
recognize the entire anticipated loss of $300,000.00($4,800,000.00+$500,000.00 -
$5,000,000.00)
What is the primary financial inference of billing in excess of cost(BIE)?
BIE indicates a liability in the balance sheet
which of the following disclosure requirements is recommended for receivables?
disclosure of retention receivable expected to be collected within one year.
Greenbuild company is seeking a large loan to finance a new sustainable construction
project. the company segregate accounts receivable on completed contracts and provide
disclosures about retention and potential uncollectible amounts.
How does this level of disclosure benefit the banker evaluating Greenbuild's loan
application?
,It provides clearer understanding of Greenbuild's cashflow , collection efficiency, and overall
financial health, enabling a more informed lending decision.
What is a common challenge in Gross profit analysis ?
Managing project delays and cost overruns
ABC company is leasing a new office building. How will it impact the company's
financial ratio, particularly the debt to equity ratio when considering the office lease
under ASC 842?
The inclusion of the lease liability in the balance sheet could increase the debt to equity ratio,
potentially affecting the company's borrowing capacity.
Measure the efficiency of converting direct cost into gross profit
Gross profit margin
Financial statement the details profit retained, dividends paid and capital introduced or
withdrawn
statement of changes in equity
Define an independent construction audit
a comprehensive review of construction project processes and financials conducted by an
independent third party.
JFK is preparing its balance sheet. They have $75,000 in AP to subcon and an $8000 in
retention. How are the amounts presented?
Accounts payable to subcon of $75,000 as a current liabililty and retention payable of $8000
as current liability
, When a construction company uses PCM, how should interest cost related to financed
construction projects be treated?
capitalized as part of the cost of the project when there are significant net expenditures
Which accounting method recognizes revenue and expenses proportionally as the
project progresses?
Percentage of completion method
A subcon has completed work on a project and a GC is holding back 10% of the
contract as retention. What best describes the purpose of this retention?
to protect the owner from non performance or substandard performance
Why is it important to tract Cost in excess of billings?
to prevent underbilling and ensure cash flow stability
What is a common accounting practice for construction companies regarding
equipment during period of low activity?
recording a full year's depreciation only in the months when equipment is typically operated
In accrual accounting for long term construction projects, how are revenues typically
recorded
based on Percentage of completion
First step in the audit process
Planning
Primary purpose of distinguishing between currently due amounts and retention in
recording receivables
