AFSB 152 CORE EXAM TEST 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔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.
✔✔progress payment - ✔✔A periodic or percentage installment payment for service
✔✔Bonus Clause - ✔✔A contract provision that provides an incentive payment for
exemplary performance
✔✔Maintenance clause (warranty clause) - ✔✔A contract provision that guarantees the
fitness of the work
✔✔Indemnification clause - ✔✔A contract provision that attempts to shift the risk and
liability for one's own negligent acts to another
✔✔Termination for convenience clause - ✔✔A contract provision that enables an owner
to end a partially completed project, provided the owner pays for the work performed
plus profit and overhead
✔✔Mechanic's lien law - ✔✔A statute that provides unpaid suppliers of labor and
materials a statutory right to file liens against real estate for the value of their labor or
materials
✔✔What are the advantages and disadvantages to a sole proprietorship - ✔✔-it is the
simplest type of business organization
-usually for small-scale business operations
-no prescribed procedures required to set up
-disadvantage-the proprietor has unlimited personal liability for its conduct
✔✔Invitation for bids (IFB) - ✔✔A solicitation document that describes the project,
quantities, specifications, delivery schedule, and other contract provisions.
✔✔Contract documents - ✔✔A variety of statements that describe each party's
obligations and rights associated with the contract, including the invitation to bidders,
bid forms and bond forms, form of agreement, conditions specifications, drawings and
plans, and addenda
✔✔Parol evidence rule - ✔✔A rule of evidence that limits the terms of a contract
evidenced by a writing to those expressed in writing.
, ✔✔Tender preparation stage - ✔✔The phase of the estimating process that produces a
detailed, comprehensive pricing estimate of the entire project.
✔✔overhead costs - ✔✔The indirect costs of materials, equipment, buildings or
personnel needed to support the construction
✔✔10 percent rule for bids - ✔✔A surety practice that requires a contractor to explain
why the difference between the first and second bid is 10 percent or greater
✔✔what functions before the bidding process does the architect need to do.......? - ✔✔-
consulting with the owner and ascertaining the project requirements
-preparing preliminary drawings and documents for the project and obtaining the
owner's approval
-Estimating the approximate cost of the project for the owner
-preparing working drawings and specifications for construction of the project after the
approval of preliminary drawings
-preparing bid documents
-assisting the owner to obtain the necessary approvals from the various governmental
authorities with jurisdiction over the project
✔✔surety bond underwriters should consider these aspects of bid bonds: - ✔✔-purpose
of bid bonds
-bid bond penalty
-bid bond form
-alternatives to bid bonds
✔✔what are the three purposes of the bid guarantee - ✔✔-to eliminate unqualified or
irresponsible contractors from competitive bidding
-to save the owner the expense of another bid letting if the successful bidder does not
accept the awarded contract
-to assure the owner of the completion of the project at the lowest possible cost
✔✔Financial statements - ✔✔-Information source for trend analysis and forecasting
-financial condition as of statement date. Reference points for forecasts
-Financial results for accounting period. future financial condition and future financial
results.
-Cash flow data- ability to meet cash requirements of business
✔✔Contract Status Reports (Long Form) - ✔✔-Information source for trend analysis and
forecasting
-Adequacy of original estimated gross profit-Adequacy of revised estimated gross profit
-Stability of cost and gross profit estimates
-Profit recognition patterns
-for forecasting: amount of backlog, backlog gross profit potential, completion dates of
contracts
SOLUTIONS RATED A+
✔✔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.
✔✔progress payment - ✔✔A periodic or percentage installment payment for service
✔✔Bonus Clause - ✔✔A contract provision that provides an incentive payment for
exemplary performance
✔✔Maintenance clause (warranty clause) - ✔✔A contract provision that guarantees the
fitness of the work
✔✔Indemnification clause - ✔✔A contract provision that attempts to shift the risk and
liability for one's own negligent acts to another
✔✔Termination for convenience clause - ✔✔A contract provision that enables an owner
to end a partially completed project, provided the owner pays for the work performed
plus profit and overhead
✔✔Mechanic's lien law - ✔✔A statute that provides unpaid suppliers of labor and
materials a statutory right to file liens against real estate for the value of their labor or
materials
✔✔What are the advantages and disadvantages to a sole proprietorship - ✔✔-it is the
simplest type of business organization
-usually for small-scale business operations
-no prescribed procedures required to set up
-disadvantage-the proprietor has unlimited personal liability for its conduct
✔✔Invitation for bids (IFB) - ✔✔A solicitation document that describes the project,
quantities, specifications, delivery schedule, and other contract provisions.
✔✔Contract documents - ✔✔A variety of statements that describe each party's
obligations and rights associated with the contract, including the invitation to bidders,
bid forms and bond forms, form of agreement, conditions specifications, drawings and
plans, and addenda
✔✔Parol evidence rule - ✔✔A rule of evidence that limits the terms of a contract
evidenced by a writing to those expressed in writing.
, ✔✔Tender preparation stage - ✔✔The phase of the estimating process that produces a
detailed, comprehensive pricing estimate of the entire project.
✔✔overhead costs - ✔✔The indirect costs of materials, equipment, buildings or
personnel needed to support the construction
✔✔10 percent rule for bids - ✔✔A surety practice that requires a contractor to explain
why the difference between the first and second bid is 10 percent or greater
✔✔what functions before the bidding process does the architect need to do.......? - ✔✔-
consulting with the owner and ascertaining the project requirements
-preparing preliminary drawings and documents for the project and obtaining the
owner's approval
-Estimating the approximate cost of the project for the owner
-preparing working drawings and specifications for construction of the project after the
approval of preliminary drawings
-preparing bid documents
-assisting the owner to obtain the necessary approvals from the various governmental
authorities with jurisdiction over the project
✔✔surety bond underwriters should consider these aspects of bid bonds: - ✔✔-purpose
of bid bonds
-bid bond penalty
-bid bond form
-alternatives to bid bonds
✔✔what are the three purposes of the bid guarantee - ✔✔-to eliminate unqualified or
irresponsible contractors from competitive bidding
-to save the owner the expense of another bid letting if the successful bidder does not
accept the awarded contract
-to assure the owner of the completion of the project at the lowest possible cost
✔✔Financial statements - ✔✔-Information source for trend analysis and forecasting
-financial condition as of statement date. Reference points for forecasts
-Financial results for accounting period. future financial condition and future financial
results.
-Cash flow data- ability to meet cash requirements of business
✔✔Contract Status Reports (Long Form) - ✔✔-Information source for trend analysis and
forecasting
-Adequacy of original estimated gross profit-Adequacy of revised estimated gross profit
-Stability of cost and gross profit estimates
-Profit recognition patterns
-for forecasting: amount of backlog, backlog gross profit potential, completion dates of
contracts
