Page 1 of 166
AFIP Basic Certification Practice Exam
2026: 100 High-Yield Questions &
Answers Rationales
Q1. A contract can be defined as an agreement that includes:
A) A handshake between two parties
B) A promise or set of promises that the law enforces or protects
C) An oral statement of intent
D) A written document signed by one party
Answer: B
Rationale: A contract is legally defined as a promise or set of
promises that the law recognizes as enforceable. While written
agreements are common, oral contracts can also be binding.
However, the essential characteristic is enforceability by law, not
the form .
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Q2. What are the three required elements of a valid contract?
A) Offer, counteroffer, and acceptance
B) Offer, acceptance, and signatures
C) Offer, acceptance, and consideration
D) Offer, acceptance, and notarization
Answer: C
Rationale: The three essential elements for contract formation
are: (1) an offer, (2) acceptance of that offer, and (3)
consideration (something of value exchanged between parties).
Without all three, no binding contract exists .
Q3. What is "consideration" as it applies to a contract?
A) A written promise to perform services
B) The requirement that each party receives something of value
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in exchange for what is given
C) The down payment made at signing
D) The total amount financed
Answer: B
Rationale: Consideration is the "bargained-for exchange"—
each party must give something of value or incur a detriment. In
a vehicle sale, the buyer receives the vehicle and the dealer
receives money or a promise to pay. Without consideration,
there is no valid contract .
Q4. Which of the following events, if any, can terminate an
offer?
A) Death or insanity of an offeree or offeror
B) The offeror changing their mind without notifying the offeree
C) The passage of 24 hours
D) A counteroffer by the offeree
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Answer: A
Rationale: An offer can be terminated by operation of law,
including the death or insanity of either party. An offer may also
be terminated by the offeror's revocation communicated to the
offeree, lapse of a specified time (or reasonable time), or
rejection/counteroffer by the offeree .
Q5. What are the three required elements for an offer to be
valid?
A) Writing, signature, and delivery
B) Intent to contract, definite terms, and communication to the
offeree
C) Verbal statement, witness, and acceptance
D) Down payment, contract, and signatures
Answer: B
AFIP Basic Certification Practice Exam
2026: 100 High-Yield Questions &
Answers Rationales
Q1. A contract can be defined as an agreement that includes:
A) A handshake between two parties
B) A promise or set of promises that the law enforces or protects
C) An oral statement of intent
D) A written document signed by one party
Answer: B
Rationale: A contract is legally defined as a promise or set of
promises that the law recognizes as enforceable. While written
agreements are common, oral contracts can also be binding.
However, the essential characteristic is enforceability by law, not
the form .
,Page 2 of 166
Q2. What are the three required elements of a valid contract?
A) Offer, counteroffer, and acceptance
B) Offer, acceptance, and signatures
C) Offer, acceptance, and consideration
D) Offer, acceptance, and notarization
Answer: C
Rationale: The three essential elements for contract formation
are: (1) an offer, (2) acceptance of that offer, and (3)
consideration (something of value exchanged between parties).
Without all three, no binding contract exists .
Q3. What is "consideration" as it applies to a contract?
A) A written promise to perform services
B) The requirement that each party receives something of value
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in exchange for what is given
C) The down payment made at signing
D) The total amount financed
Answer: B
Rationale: Consideration is the "bargained-for exchange"—
each party must give something of value or incur a detriment. In
a vehicle sale, the buyer receives the vehicle and the dealer
receives money or a promise to pay. Without consideration,
there is no valid contract .
Q4. Which of the following events, if any, can terminate an
offer?
A) Death or insanity of an offeree or offeror
B) The offeror changing their mind without notifying the offeree
C) The passage of 24 hours
D) A counteroffer by the offeree
, Page 4 of 166
Answer: A
Rationale: An offer can be terminated by operation of law,
including the death or insanity of either party. An offer may also
be terminated by the offeror's revocation communicated to the
offeree, lapse of a specified time (or reasonable time), or
rejection/counteroffer by the offeree .
Q5. What are the three required elements for an offer to be
valid?
A) Writing, signature, and delivery
B) Intent to contract, definite terms, and communication to the
offeree
C) Verbal statement, witness, and acceptance
D) Down payment, contract, and signatures
Answer: B
