AFSB 152 EVALUATION EXAM 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔Which one of the following is true regarding components of a contractor's balance
sheet?
- Total liabilities are comprised of current liabilities added to property and equipment
- The two major categories on a contractor's balance sheet are assets and liabilities
- Total liabilities added to stockholders' equity equals the total assets
- Stockholders' equity is comprised of common stock, retained earnings, and long-term
debt - ✔✔Total liabilities added to stockholders' equity equals the total assets
✔✔Which one of the following describes what happens if there are gaps or omissions in
the construction plans and specifications when they are offered in the competitive bid
process, and they are discovered after the construction begins?
- The contractor must make the changes at its own costs because it failed to notice the
gaps or omissions before placing a bid to contract for the project
- The project owner must pay additional money to the contractor in the form of change
orders during the course of construction
- The contractor must complete the project according to the plans and specifications,
and the owner must contract to correct the problems when the construction is
completed
- The contractor must make the changes and negotiate with the project owner to share
the costs of the changes - ✔✔The project owner must pay additional money to the
contractor in the form of change orders during the course of construction
✔✔Sheldon Contracting was hired as the general contractor for a large commercial
project. The general contractor is responsible to the owner for
- Properly constructing the project in accordance with the plans and specifications and
in the prescribed time period
- Furnishing an estimated project cost that can be used to negotiate financing with
lending institutions
- Engaging consultants in fields for which he or she lacks the expertise necessary for
the particular project
- Defining the project through specifications that, if built in accordance with their terms,
fulfill the owner's expectations - ✔✔Properly constructing the project in accordance with
the plans and specifications and in the prescribed time period
✔✔Which one of the following in a construction contract would make failure to promptly
complete a project a material breach of contract?
- Time is of the essence provision
- Time for completion clause
- Retainage
- Force majeure clause - ✔✔Time is of the essence provision
, ✔✔A contractor may take advantage of saved costs, when estimating materials and
equipment, by
- Ordering all supplies for the project from a single supplier or from a given
manufacturer
- Considering the costs of expendable equipment that will be lost, damaged, or worn out
during the project
- Considering reuse of materials that were used temporarily in one project in a
subsequent project
- Considering the costs of equipment that is needed to install certain building features
and any required assembly time - ✔✔Considering reuse of materials that were used
temporarily in one project in a subsequent project
✔✔Crowley Construction was bidding on a large construction contract for Wolff
Properties. Crowley Construction was named as the principal on a bid bond. A bid bond
guarantees that if the contract is awarded to the principal,
- The principal will sign the contract within a specified time after the award and furnish
the required performance and payment bonds
- The surety will pay the percentage bond penalty or the difference between the
principal's bid and the next lowest bid, whichever is greater, if the principal defaults on
the bond
- The principal will complete the contract as described in the specifications and within
the time specified
- The surety will pay the costs to complete the project if the principal fails to complete it -
✔✔The principal will sign the contract within a specified time after the award and furnish
the required performance and payment bonds
✔✔When disputes arise between owners and general contractors, or between general
contractors and their subcontractors, the issues are usually decided by examining the
- Invitation for bids
- Set of contract documents
- Cut sheet
- Contractor's Qualification Statement - ✔✔Set of contract documents
✔✔Similar to most contractors, Crowley Construction's primary consideration
influencing its selection of a tax-reporting method is
- The most accurate method of reporting the contractor's financial condition
- Deferral of payment of income taxes to the greatest extent permitted
- To use the same method as the one used by the contractor for financial reporting
- The method required by the Internal Revenue Service for all contractors - ✔✔Deferral
of payment of income taxes to the greatest extent permitted
✔✔Which one of the following measures the contractor's financial condition at a point in
time?
- Notes to financial statement
- Independent auditors' report
SOLUTIONS RATED A+
✔✔Which one of the following is true regarding components of a contractor's balance
sheet?
- Total liabilities are comprised of current liabilities added to property and equipment
- The two major categories on a contractor's balance sheet are assets and liabilities
- Total liabilities added to stockholders' equity equals the total assets
- Stockholders' equity is comprised of common stock, retained earnings, and long-term
debt - ✔✔Total liabilities added to stockholders' equity equals the total assets
✔✔Which one of the following describes what happens if there are gaps or omissions in
the construction plans and specifications when they are offered in the competitive bid
process, and they are discovered after the construction begins?
- The contractor must make the changes at its own costs because it failed to notice the
gaps or omissions before placing a bid to contract for the project
- The project owner must pay additional money to the contractor in the form of change
orders during the course of construction
- The contractor must complete the project according to the plans and specifications,
and the owner must contract to correct the problems when the construction is
completed
- The contractor must make the changes and negotiate with the project owner to share
the costs of the changes - ✔✔The project owner must pay additional money to the
contractor in the form of change orders during the course of construction
✔✔Sheldon Contracting was hired as the general contractor for a large commercial
project. The general contractor is responsible to the owner for
- Properly constructing the project in accordance with the plans and specifications and
in the prescribed time period
- Furnishing an estimated project cost that can be used to negotiate financing with
lending institutions
- Engaging consultants in fields for which he or she lacks the expertise necessary for
the particular project
- Defining the project through specifications that, if built in accordance with their terms,
fulfill the owner's expectations - ✔✔Properly constructing the project in accordance with
the plans and specifications and in the prescribed time period
✔✔Which one of the following in a construction contract would make failure to promptly
complete a project a material breach of contract?
- Time is of the essence provision
- Time for completion clause
- Retainage
- Force majeure clause - ✔✔Time is of the essence provision
, ✔✔A contractor may take advantage of saved costs, when estimating materials and
equipment, by
- Ordering all supplies for the project from a single supplier or from a given
manufacturer
- Considering the costs of expendable equipment that will be lost, damaged, or worn out
during the project
- Considering reuse of materials that were used temporarily in one project in a
subsequent project
- Considering the costs of equipment that is needed to install certain building features
and any required assembly time - ✔✔Considering reuse of materials that were used
temporarily in one project in a subsequent project
✔✔Crowley Construction was bidding on a large construction contract for Wolff
Properties. Crowley Construction was named as the principal on a bid bond. A bid bond
guarantees that if the contract is awarded to the principal,
- The principal will sign the contract within a specified time after the award and furnish
the required performance and payment bonds
- The surety will pay the percentage bond penalty or the difference between the
principal's bid and the next lowest bid, whichever is greater, if the principal defaults on
the bond
- The principal will complete the contract as described in the specifications and within
the time specified
- The surety will pay the costs to complete the project if the principal fails to complete it -
✔✔The principal will sign the contract within a specified time after the award and furnish
the required performance and payment bonds
✔✔When disputes arise between owners and general contractors, or between general
contractors and their subcontractors, the issues are usually decided by examining the
- Invitation for bids
- Set of contract documents
- Cut sheet
- Contractor's Qualification Statement - ✔✔Set of contract documents
✔✔Similar to most contractors, Crowley Construction's primary consideration
influencing its selection of a tax-reporting method is
- The most accurate method of reporting the contractor's financial condition
- Deferral of payment of income taxes to the greatest extent permitted
- To use the same method as the one used by the contractor for financial reporting
- The method required by the Internal Revenue Service for all contractors - ✔✔Deferral
of payment of income taxes to the greatest extent permitted
✔✔Which one of the following measures the contractor's financial condition at a point in
time?
- Notes to financial statement
- Independent auditors' report
