Contract Financing and Payment Management Flashcards
6 cards from real CTCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Contract Financing and Payment Management flashcards as text
A Texas state contract includes a 'not-to-exceed' (NTE) ceiling. What action must the contract manager take before the vendor reaches the ceiling?
Answer: Execute a contract modification to increase the ceiling if continued work is needed
When expenditures approach the NTE ceiling, the contract manager must execute a formal modification to increase the ceiling before the limit is reached to avoid unauthorized obligations.
Under Texas state accounting rules, an 'encumbrance' on a contract represents what?
Answer: Funds reserved against the budget to cover an anticipated expenditure
An encumbrance is a budget reservation that sets aside funds to cover a committed or anticipated expenditure, ensuring the money is not spent on other purposes.
Which invoice review step is most critical to prevent payment of undelivered goods in a Texas state purchase order contract?
Answer: Matching the invoice to the receiving report confirming delivery
Three-way matching — comparing the purchase order, invoice, and receiving report — is the primary control to ensure payment is only made for goods actually received.
A Texas agency contract includes a liquidated damages clause of $500 per day for late delivery. If the vendor delivers 10 days late, what is the agency's correct action?
Answer: Deduct $5,000 from the vendor's next invoice per the contract terms
Liquidated damages clauses are contractually pre-negotiated remedies that must be enforced per the contract terms, allowing the agency to deduct the agreed daily rate from payment.
What is the purpose of requiring a contractor to submit a Schedule of Values before work begins on a Texas construction contract?
Answer: To break down the contract price into components used to evaluate progress payment requests
A Schedule of Values allocates the total contract price across work components, providing the baseline for evaluating whether progress payment requests reflect actual work completed.
Under Texas state finance rules, what is the maximum period for which a state agency may execute a contract without specific legislative appropriation authority?
Answer: The biennium (two-year legislative appropriation period)
Texas operates on a biennial appropriations cycle, and state contracts are generally limited to the biennium unless specific statutory or legislative authority authorizes multi-biennium commitments.