CCIFP Practice Exam – Questions With Expert Solutions
A contractor has a claim for extended field overhead on a federal government
contract. the contract billings were $10 million. the contractor's total billings
during the contract period were $100 million. the contractors total overhead
cost during the contract period were $3 million. the contractor worked 1 year
on the project. the government caused the contractor to be delayed by 60 days
on this contract. using the Eichleay formula, what is the contractors claim for
overhead due to the delay?
- $42,353
- $49,315
- $493,151
- $59,016 Correct Answer - $49,315
Contract billings / Total billings during contract period = Overhead %
$10,000,000 / $100,000,000 = 10%
Overhead % x Total overhead during contract period = Allocated overhead
10% x $3,000,000 = $300,000
Allocated overhead / Days of contract performance = Overhead per day
$300, = $821.92
Overhead per day x Number of days delayed = Overhead due to delay
$821.92 x 60 = $49,315
On a typical construction project whereby the owner has requested
performance and payment bonds from the general contractor, the owner is
referred to as the...
- Principal
- Obligee
- Underwriter
- Obligor Correct Answer - obligee
when computing the taxable income for a proposed capital project, the
financial manager should use which tax rate?
,- Average
- Base
- Marginal
- Capital Gains Correct Answer - marginal
What coverage trigger is used with a commercial general liability policy when
the insurance policy in effect at the time the property damage loss occurs
responds to that loss, regardless of when the contractor learns about the loss
or when a claim is filed against the contractor?
- Limitation of liability trigger
- Stop loss trigger
- Occurrence trigger
- Claims made trigger Correct Answer - Occurrence trigger
Under an occurrence-based policy, coverage is triggered by the date the
damage or injury occurs, not when the claim is made or discovered. This
means the policy in force at the time of the incident will respond, even if the
claim is filed years later.
Claims made trigger applies when the policy only covers claims made during
the policy period, regardless of when the incident occurred. This is common in
professional liability insurance but not typical for standard CGL policies.
Pursuant to GAAP, which of the following methods of recognizing revenue is
most frequently used in construction accounting?
- Accrual (Billing) Method
- Cash Method
- Completed Contract Method
- Percentage of Completion Method Correct Answer - Percentage of
Completion Method
Contractors can maximize controls over cash disbursements by implementing
some of the following..... 15.06 [2] Correct Answer - 1) Knowing vendor
systems
2) Using Controlled Disbursement bank Accounts
3) Implementing an open purchase order/contract commitment system
,4) Soliciting Cooperation from Project Management to minimize early
Payments to subcontractors and suppliers
What role do Domain Controllers Serve within an Active Directory? Correct
Answer - To manage trust among the domains by granting access to users
from one domain to the other via a proper security authentication process.
a construction company should record interest rate swaps purchased for
business purposes using which method of valuation?
- Intrinsic value
- Fair market value
- Net present value
- Discounted value Correct Answer - Fair Market Value
Which of the following contract provisions is exculpatory?
- Provision for Arbitration
- No damages for delay clause
- Performance specifications
- Compensation for extra work Correct Answer - No damages for delay
clause
An exculpatory clause is a contract provision that relieves one party from
liability for certain damages or losses. The "no damages for delay" clause does
exactly that—it limits or eliminates the contractor's ability to recover
damages (like extended overhead or lost profits) due to delays, even if those
delays are caused by the owner. This clause shifts the risk of delay-related
costs from the owner to the contractor, effectively excusing the owner from
financial responsibility for certain types of delays.
Exculpatory sounds like excuse
Section 460 of the Internal Revenue Code defines the following? 29.03 [b]
Correct Answer - 29.03 [b]
ABC Company hires a subcontractor to work on a project that will span over 5
years. The subcontract amount is $500,000 and is to be billed monthly to ABC
, Company. Retention of 10% is to be held until the subcontractor is 75%
complete and the owner of the project has approved the release of retention.
How should ABC Company record the subcontractor retention on its records
in the first year of the project?
- Non-current liability
- Current liability
- Contract billing
- Current asset Correct Answer - current-liability
under the completed contract method of accounting, how are general and
administrative cost realized on the income statement? Correct Answer -
Expensed and recognized in the year incurred.
The length of a contractors operation cycle determines what is considered a
current asset or liability for their classified balance sheet. it has become
common practice in the construction industry to classify all contract-related
assets and liabilities as current based on what measurement?
- 24 months
- Always 12 months
- Average length of their contracts
- 18 months Correct Answer - average length of their contract.
five steps of strategic planning are: develop an internal understanding of
existing businesses, identify new business opportunities, ______________, develop
a strategic plan, implement the plan. Correct Answer - analyze
alternatives
a loss or claim under a surety bond is generally triggered by....
- Property damage
- Losses that are expressly insured by the policy
- A default of the contract
- Personal injury Correct Answer - a default of the contract
Property damage: This is typically covered by insurance, not a surety bond.
A contractor has a claim for extended field overhead on a federal government
contract. the contract billings were $10 million. the contractor's total billings
during the contract period were $100 million. the contractors total overhead
cost during the contract period were $3 million. the contractor worked 1 year
on the project. the government caused the contractor to be delayed by 60 days
on this contract. using the Eichleay formula, what is the contractors claim for
overhead due to the delay?
- $42,353
- $49,315
- $493,151
- $59,016 Correct Answer - $49,315
Contract billings / Total billings during contract period = Overhead %
$10,000,000 / $100,000,000 = 10%
Overhead % x Total overhead during contract period = Allocated overhead
10% x $3,000,000 = $300,000
Allocated overhead / Days of contract performance = Overhead per day
$300, = $821.92
Overhead per day x Number of days delayed = Overhead due to delay
$821.92 x 60 = $49,315
On a typical construction project whereby the owner has requested
performance and payment bonds from the general contractor, the owner is
referred to as the...
- Principal
- Obligee
- Underwriter
- Obligor Correct Answer - obligee
when computing the taxable income for a proposed capital project, the
financial manager should use which tax rate?
,- Average
- Base
- Marginal
- Capital Gains Correct Answer - marginal
What coverage trigger is used with a commercial general liability policy when
the insurance policy in effect at the time the property damage loss occurs
responds to that loss, regardless of when the contractor learns about the loss
or when a claim is filed against the contractor?
- Limitation of liability trigger
- Stop loss trigger
- Occurrence trigger
- Claims made trigger Correct Answer - Occurrence trigger
Under an occurrence-based policy, coverage is triggered by the date the
damage or injury occurs, not when the claim is made or discovered. This
means the policy in force at the time of the incident will respond, even if the
claim is filed years later.
Claims made trigger applies when the policy only covers claims made during
the policy period, regardless of when the incident occurred. This is common in
professional liability insurance but not typical for standard CGL policies.
Pursuant to GAAP, which of the following methods of recognizing revenue is
most frequently used in construction accounting?
- Accrual (Billing) Method
- Cash Method
- Completed Contract Method
- Percentage of Completion Method Correct Answer - Percentage of
Completion Method
Contractors can maximize controls over cash disbursements by implementing
some of the following..... 15.06 [2] Correct Answer - 1) Knowing vendor
systems
2) Using Controlled Disbursement bank Accounts
3) Implementing an open purchase order/contract commitment system
,4) Soliciting Cooperation from Project Management to minimize early
Payments to subcontractors and suppliers
What role do Domain Controllers Serve within an Active Directory? Correct
Answer - To manage trust among the domains by granting access to users
from one domain to the other via a proper security authentication process.
a construction company should record interest rate swaps purchased for
business purposes using which method of valuation?
- Intrinsic value
- Fair market value
- Net present value
- Discounted value Correct Answer - Fair Market Value
Which of the following contract provisions is exculpatory?
- Provision for Arbitration
- No damages for delay clause
- Performance specifications
- Compensation for extra work Correct Answer - No damages for delay
clause
An exculpatory clause is a contract provision that relieves one party from
liability for certain damages or losses. The "no damages for delay" clause does
exactly that—it limits or eliminates the contractor's ability to recover
damages (like extended overhead or lost profits) due to delays, even if those
delays are caused by the owner. This clause shifts the risk of delay-related
costs from the owner to the contractor, effectively excusing the owner from
financial responsibility for certain types of delays.
Exculpatory sounds like excuse
Section 460 of the Internal Revenue Code defines the following? 29.03 [b]
Correct Answer - 29.03 [b]
ABC Company hires a subcontractor to work on a project that will span over 5
years. The subcontract amount is $500,000 and is to be billed monthly to ABC
, Company. Retention of 10% is to be held until the subcontractor is 75%
complete and the owner of the project has approved the release of retention.
How should ABC Company record the subcontractor retention on its records
in the first year of the project?
- Non-current liability
- Current liability
- Contract billing
- Current asset Correct Answer - current-liability
under the completed contract method of accounting, how are general and
administrative cost realized on the income statement? Correct Answer -
Expensed and recognized in the year incurred.
The length of a contractors operation cycle determines what is considered a
current asset or liability for their classified balance sheet. it has become
common practice in the construction industry to classify all contract-related
assets and liabilities as current based on what measurement?
- 24 months
- Always 12 months
- Average length of their contracts
- 18 months Correct Answer - average length of their contract.
five steps of strategic planning are: develop an internal understanding of
existing businesses, identify new business opportunities, ______________, develop
a strategic plan, implement the plan. Correct Answer - analyze
alternatives
a loss or claim under a surety bond is generally triggered by....
- Property damage
- Losses that are expressly insured by the policy
- A default of the contract
- Personal injury Correct Answer - a default of the contract
Property damage: This is typically covered by insurance, not a surety bond.
