Free CCIFP Practice Questions

Question 1

A contractor purchases a wheel loader for $240,000. It also pays $17,000 in freight, $36,000 for installation and commissioning, $12,000 in sales tax, and $28,000 for a separately stated three-year preventive maintenance contract. What amount should be recorded as the depreciable basis of the equipment?

Accepted Answer

$305,000

Answer

$333,000

Answer

$293,000

Answer

$276,000

Question 2

A contract has a price of $4,000,000 and estimated total costs of $3,400,000. Costs incurred to date are $1,700,000 and billings to date are $2,100,000. Using the cost-to-cost method, what is the over/(under) billing on this contract?

Accepted Answer

$100,000 overbilled

Answer

$400,000 overbilled

Answer

$400,000 underbilled

Answer

$100,000 underbilled

Question 3

Which statement BEST distinguishes a surety bond from an insurance policy?

Accepted Answer

A surety bond is a three-party agreement under which the surety expects no losses and retains a right of indemnity against the principal

Answer

A surety bond transfers the risk of contractor default away from the obligee to a third party, whereas an insurance policy leaves that risk retained within the insured entity itself

Answer

A surety bond responds to losses arising out of the contractor's own defective performance, whereas an insurance policy responds only to losses that are caused by third parties

Answer

A surety bond may be issued only in connection with public works that are subject to statutory bonding requirements, whereas insurance is available on both public and private projects

Question 4

On the balance sheet of a construction contractor, an amount reported as "costs and estimated earnings in excess of billings" represents:

Accepted Answer

A contract asset, because the contractor has performed work it has not yet billed

Answer

A contract liability, because the contractor has billed the owner in advance for work that it has not yet performed

Answer

A contract liability, because the contractor has performed work that it has not yet billed to the owner

Answer

A contract asset, because the contractor has billed the owner in advance for work that it has not yet performed

Question 5

A general contractor's $18,000,000 contract to build an office tower includes excavation, structural steel, envelope, MEP systems, and interior finishes. Under ASC 606, this contract is MOST likely accounted for as a single performance obligation because:

Accepted Answer

The contractor provides a significant service of integrating the individual scopes into one combined output, so they are not separately identifiable in the context of the contract

Answer

None of the individual scopes of work is capable of being distinct, since the customer could not benefit from any one of them on its own or together with other resources readily available to it

Answer

The scopes of work are all performed under a single contract, with a single customer, for a single stated contract price, and are therefore treated as a single unit of account

Answer

Long-term construction contracts are scoped out of the performance obligation guidance in ASC 606 and continue to be accounted for as one unit of account under longstanding industry practice

Question 6

At the end of Q2, a contractor determines that a contract that is 20% complete will result in a total loss of $450,000. How much loss should be recognized in Q2?

Accepted Answer

$450,000

Answer

$90,000

Answer

$0; the loss is recognized at contract completion

Answer

$360,000

Question 7

A contractor's workers' compensation loss history shows one severe claim of $600,000 in the experience period. A competitor of similar size and payroll has nine claims totaling $600,000. All other factors are equal. Compared to the competitor, this contractor's experience modification rate will MOST likely be:

Accepted Answer

Lower, because the experience rating formula weights claim frequency more heavily than claim severity

Answer

Higher, because the experience rating formula weights claim severity more heavily than claim frequency

Answer

The same, because both contractors have identical total incurred losses within the experience period

Answer

Lower, because a single catastrophic claim is excluded from the experience rating calculation entirely

Question 8

A contractor's $6,000,000 contract requires it to procure and install a custom chiller. The chiller costs $900,000, the owner takes control of it on delivery to the site, and it will sit for four months before installation. The contractor did not design or manufacture it and simply arranged its purchase. At delivery, under ASC 606, the contractor should:

Accepted Answer

Recognize revenue equal to the $900,000 cost with zero margin, and exclude the cost from the cost-to-cost measure of progress

Answer

Recognize no revenue on the chiller and exclude its $900,000 cost from costs incurred until it is installed

Answer

Recognize revenue of $900,000 at the contract's overall gross profit margin, and include the cost in the cost-to-cost measure

Answer

Recognize revenue of $900,000 with zero margin, and include the cost in the cost-to-cost measure of progress

Question 9

A subcontract states: "Contractor shall pay Subcontractor within ten days of Contractor's receipt of payment from Owner, receipt of such payment being an express condition precedent to any obligation of Contractor to pay Subcontractor." The Owner becomes insolvent and never pays the Contractor. In a jurisdiction that enforces such clauses, the effect is that:

Accepted Answer

The Subcontractor bears the risk of the Owner's nonpayment and is never entitled to payment under the subcontract

Answer

The Contractor bears the risk of the Owner's nonpayment and remains obligated to pay the Subcontractor within a reasonable time

Answer

The Contractor must pay the Subcontractor within ten days of the application in any event, because the clause fixes only the timing of payment

Answer

The risk of nonpayment is shared between them, and the Subcontractor is entitled to a pro rata share of whatever the Contractor ultimately collects

Question 10

A contractor adopts ASC 842 and capitalizes a large fleet of equipment leases previously classified as operating leases. Assuming no other changes, the MOST likely effect on the contractor's balance sheet is that:

Accepted Answer

Working capital decreases, because the current portion of the lease liability is a current liability while the right-of-use asset is non-current

Answer

Working capital is unchanged, because the right-of-use asset and the corresponding lease liability are recognized in equal and offsetting amounts

Answer

Working capital increases, because the right-of-use asset is recorded as a current asset while the related lease liability is amortized over the full lease term

Answer

Working capital is unchanged, but tangible net worth decreases, because the right-of-use asset is an intangible and is excluded from tangible net worth

Free CCIFP Practice Questions

Domain 1: Accounting and Reporting 23% of exam

Question 1

Question 2

Question 3

Question 4

Question 5

Domain 2: Revenue Recognition Methods 21% of exam

Question 6

Question 7

Domain 4: Risk Management 13% of exam

Question 8

Question 9

Domain 5: Taxes 6% of exam

Question 10

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