Mechanic Privileges and Limitations
Part 65, Subpart E governs certificated mechanics, and the questions test the boundary between what you may and may not do.
Privileges (65.81). A mechanic holding an airframe and/or powerplant rating may perform or supervise the maintenance, preventive maintenance, or alteration of an aircraft or component for which he or she is rated, and may approve it for return to service. The mechanic must have personally observed the work or inspected it before approving it. Recent experience (65.83) requires six months of work in the preceding 24 months; otherwise those privileges may not be exercised until re-qualified.
Limits. An A&P may perform a 100-hour inspection but not an annual inspection. An annual inspection requires an Inspection Authorization (65.95), which itself requires holding an A&P rating and meeting experience requirements. A mechanic may not approve for return to service an aircraft that has had a major alteration or major repair unless it was done per approved data, and those actions are recorded on Form 337.
Preventive maintenance. Part 43, Appendix A lists the preventive maintenance a pilot may perform; a certificated mechanic may also perform it, but the return-to-service rules still apply.
Traps. The exam likes the claim that a mechanic may return an aircraft to service after a major alteration without a Form 337 (false), and that any A&P may perform an annual inspection (false without an IA). Also watch the rating: an airframe mechanic cannot sign off a powerplant repair.
Rule of thumb. If you did not do it or see it, you cannot sign it.