Law & Bus Test 2 CA Contractor's Law and Business Test 2

Which of the following are employees NOT required to learn? A. CPR B. how to conduct tailgate safety meetings C. safety features of tools D. first-aid procedures

A. CPR

What is the best way to monitor labor costs? A. Figure the hours from detailed time cards. B. Compare previous labor costs. C. Ask crew supervisors. D. Check the profit-and-loss statement.

A. Figure the hours from detailed time cards.

You are bidding on a job with plans drawn by a homeowner. You notice that the dimensions on the plans do not add up. What should you do? A. Inform the homeowner that you cannot bid until the numbers add up. B. Tell the homeowner to consult an architect. C. Bid the job as is. You can add change orders later. D. Make the corrections yourself and bid the job.

A. Inform the homeowner that you cannot bid until the numbers add up.

Of the following, which is the best description of "accounts receivable"? A. Money due from customers who have purchased goods or services on credit. B. Business costs and expenses due and payable within the current accounting period. C. Accounts listed on the liability side of the balance sheet. D. Money owed to material suppliers for credit purchases.

A. Money due from customers who have purchased goods or services on credit.

You are at a critical point in a project, and the owner tells you that something already completed was not done correctly. What should you do? A. Tell the owner you will attend to the matter after you complete the critical work you are doing. B. Stop work on the critical job and remedy the error. C. Hire more workers to remedy the error. D. Ask the owner to sign a change order.

A. Tell the owner you will attend to the matter after you complete the critical work you are doing.

What federal forms are given to a newly hired employee? A. W-4 and I-9 B. W-4 and DE-1 C. I-9 and W-3 D. 1099-R and FTD-8109

A. W-4 and I-9

"Contractors are required by law to be licensed and regulated by the Contractors' State License Board. Any questions concerning a contractor may be referred to the Registrar, Contractors' State License Board, P.O. Box 26000, Sacramento, California, 95826." This statement must be on: A. all prime contracts B. all prime contracts and subcontracts C. all prime contracts, subcontracts, and advertising D. only contracts for jobs over $500

A. all prime contracts

A(n) _____ is used to analyze the income and outflow of cash during a period of time. A. balance sheet B. income statement C. profit plan D. cash flow statement

A. balance sheet

Social security tax for a self-employed contractor is: A. based on the rate set for the self-employed for the year in which the tax is paid B. zero because self-employed contractors are not required to pay social security tax C. the same as the employees' rate D. half the employees' rate

A. based on the rate set for the self-employed for the year in which the tax is paid

If a building permit is required, when does the law permit a building inspector to enter and inspect a residence? A. between 8 am and 6 pm unless the owner has given permission to inspect at some other time B. within 24 hours after the building department is notified that construction has been completed C. 10 days after completion of all work D. anytime--day or night

A. between 8 am and 6 pm unless the owner has given permission to inspect at some other time

A contractor bids on a home improvement project and earns the bid. Later, he decides not to take the job. Which bond would protect the home owner? A. bid bond B. performance bond C. contract bond D. completion bond

A. bid bond

Using money from a current job to pay for unrelated projects is called: A. diversion B. usury C. penury D. transmigration

A. diversion

Which of the following is not covered by standard contractor's insurance policies? A. employees' tools B. contractor's tools C. damage from fire, storm, theft, and vandalism D. job materials

A. employees' tools

Who must pay for a pre-employment physical? A. employer B. employee C. employer and employee D. workers' compensation insurer

A. employer

When preparing a bid, you should: A. evaluate the effect of unexpected delays on costs B. put as little in writing as possible C. schedule the job to slightly overload your capacity D. none of the above

A. evaluate the effect of unexpected delays on costs

If a subcontractor were to serve the owner with a stop notice, the most likely reason would be to: A. inform the owner that the subcontractor has not been paid by the prime, and the owner must set aside sufficient funds to pay the subcontractor's bill B. inform the owner that the owner's property will be attached if payment is not made C. notify the owner that a lien will be filed against the property if the subcontractor is not paid D. notify the owner that the subcontractor has completed his portion of the work

A. inform the owner that the subcontractor has not been paid by the prime, and the owner must set aside sufficient funds to pay the subcontractor's bill

Of the following, which is usually the most difficult item to estimate? A. labor B. materials C. overhead D. profit

A. labor

Which of the following is considered a fixed expense? A. office rent B. wages C. office supplies D. materials

A. office rent

How often should a job supervisor or responsible managing employee visit the job site? A. once a day B. once a week C. once a month D. whenever he is near the job site

A. once a day

An RME may act as the qualifier for no more than _____ firms in any one-year period. A. one B. two C. three D. four

A. one

Star Construction moved to a new office but never filed a change-of-address form with the Registrar. Consequently, Star never received a renewal application. If Star fails to renew its license within three years of the date of expiration, Star will have to: A. pay a delinquency fee to renew license B. simply file contractor's license bond C. apply for a new license D. complete and file a delinquent license renewal form

A. pay a delinquency fee to renew license

After the building plans are approved, what is the next step? A. review the plans for errors or corrections B. hire employees C. schedule the job D. order materials

A. review the plans for errors or corrections

Who furnishes MSDS sheets? A. supplier B. Cal/OSHA C. DOSH D. contractor

A. supplier

In the cash system of accounting, a transaction is recorded or posted: A. when cash changes hands B. when an amount is approved for payment C. when an amount is invoiced D. when cash is earned and expenses are incurred

A. when cash changes hands

A notice canceling a home solicitation contract becomes effective: A. when the written notice is deposited in the mail B. when signed by the owner C. the day the owner cancels by telephone D. within 72 hours from the postmark on the cancellation letter

A. when the written notice is deposited in the mail

Disabled access laws went into effect in _____ for public buildings and in _____ for private buildings. A. 1960 ... 1961 B. 1968 ... 1970 C. 1970 ... 1971 D. 1975 ... 1976

B. 1968 ... 1970

AB 2040 requires that before work begins on a project, the contractor must inquire of the owner whether asbestos is present in any building constructed prior to: A. 1968 B. 1978 C. 1982 D. 1985

B. 1978

How many days of inactivity must pass before a notice of cessation may be recorded? A. 10 days B. 30 days C. 60 days D. 90 days

B. 30 days

If an owner cancels a home solicitation contract on March 20, by what date must the contractor return the down payment? A. 23-Mar B. 30-Mar C. 1-Apr D. 20-Apr

B. 30-Mar

An active contractor's license is issued on January 18, 1995. On what date will the license expire? A. 18-Jan-97 B. 31-Jan-97 C. 18-Jan-99 D. 31-Jan-99

B. 31-Jan-97

A consumer may cancel a home solicitation contract at any time prior to midnight of the _____ after the date of the transaction. A. 2nd business day B. 3rd business day C. 5th business day D. 7th calendar day

B. 3rd business day

A subcontractor must file a mechanics' lien with the: A. County Clerk B. County Recorder C. owner D. lender

B. County Recorder

To whom does an employer pay FUTA tax? A. Employment Development Department B. Internal Revenue Service C. U.S. Department of Labor D. State Franchise Tax Board

B. Internal Revenue Service

Unsafe or faulty equipment is found on a job site. What should be done? A. The contractor should call Cal/OSHA. B. It is the contractor's responsibility to correct the problem. C. It is the property owner's responsibility to correct the problem. D. It is the employees' responsibility to correct the problem.

B. It is the contractor's responsibility to correct the problem.

What is the best way to ensure that your license bond remains in effect after its expiration date (i.e., what is the best way to avoid a period of suspension)? A. Renew the bond seven days after expiration. B. Make sure the effective date of the new bond is the same as the cancellation date of the old bond. C. Make sure the effective date of the new bond is the day after the cancellation date of the old bond. D. Buy a second bond that overlaps coverage.

B. Make sure the effective date of the new bond is the same as the cancellation date of the old bond.

A contractor is bidding on a project for a homeowner. The homeowner has included several "extra" items to be bid upon. After receiving the bid, the homeowner said it was too high and asked the contractor to lower the price. What should the contractor do? A. Decline the work. B. Negotiate with the homeowner to reduce the scope of the work by eliminating some of the extra items. C. Lower your bid to cost and hope to recover the overhead later. D. Lower your bid to cost and overhead only (eliminate the profit).

B. Negotiate with the homeowner to reduce the scope of the work by eliminating some of the extra items.

If you find that work done by a previous contractor is in violation of the local building code, what should you do? A. Repair the violation immediately. B. Report the violation to the owner with an estimate for the needed repairs. C. Report the violation directly to the building department. D. The contractor may ignore the violation.

B. Report the violation to the owner with an estimate for the needed repairs.

If you are a subcontractor, there are three general steps in the mechanics' lien procedure to make sure you are paid for works of improvement upon property. Step 1: Determine the exact legal description of the property (map book, page, etc.). Step 2: Step 3: Complete the work and record a Claim of Lien if you are not paid on time. What is Step 2? A. Request prepayment for your work. B. Serve a preliminary 20-day notice. C. Run credit checks on the owner and prime contractor. D. List the attorney representing the subcontractor.

B. Serve a preliminary 20-day notice.

How do you know if you are bidding correctly? A. You are getting all the jobs you bid on. B. The job cost is almost the same as the estimated cost. C. The job cost is substantially below the estimated cost. D. The job cost is substantially above the estimated cost.

B. The job cost is almost the same as the estimated cost.

How should the prime contractor determine whether a subcontractor has workers' compensation insurance? A. Subcontractors do not need workers' compensation insurance. B. The prime contractor should ask to see the expiration date on the sub's certificate of insurance. C. The prime contractor should periodically call the sub's insurance agent to check on the sub's policies. D. The prime contractor should check with the Registrar's office to see if the sub is insured.

B. The prime contractor should ask to see the expiration date on the sub's certificate of insurance.

As part of the safety training process, contractors' supervisors are required to meet with management how often? A. Meetings must be held weekly. B. They are required to meet monthly C. When there is an accident at the job site. D. When a change order is executed and an accident happens.

B. They are required to meet monthly

At the end of each month, data are posted from the bookkeeping journals to the: A. payment journal B. general ledger C. receipts journal D. general journal

B. general ledger

Where must a contractor include the "Notice to Owner"? A. in all home improvement contracts B. in all home improvement contracts over $500 C. in all contracts for government projects D. in all public and private works contracts

B. in all home improvement contracts over $500

Of the following, who may not approve a set of plans in the State of California? A. architect B. interior designer C. engineer D. owner-builder

B. interior designer

A supplier who is furnishing a contractor with equipment or materials without any form of security other than the reputation of the contractor for paying debts when due has extended what type of credit? A. unsecured loan B. open account C. uninsured load D. closed account

B. open account

A client wants the house painted and carpet installed. What license classification(s) is/are required for this work? A. painting and decorating (C-33), flooring and floor covering (C-15), and general building (B) classifications B. painting and decorating (C-33) and flooring and floor covering (C-15) classifications C. painting and decorating (C-33) classification D. general building (B) classification

B. painting and decorating (C-33) and flooring and floor covering (C-15) classifications

When a joint control addendum is used, which of the following does not have to be included in a home improvement contract? A. owner's signature B. schedule of payments C. Notice to Owner D. license number of the contractor

B. schedule of payments

When calculating unemployment and disability insurance taxes, an employer would not include: A. bonuses B. severance pay C. wages D. overtime pay

B. severance pay

An employee whose regular rate is $10/hour works 60 hours one week and 30 hours the next. Based on a two-week payroll system, what are the gross wages due? A. $700 B. $900 C. $1,000 D. $1,500

C. $1,000

What is the maximum number of exemptions an employee can put on their W-4 before you have to send the form to the IRS? A. 6 B. 8 C. 10 D. 12

C. 10

Except in an emergency, you must notify the regional Underground Service Alert Notification Center no less than _____ nor more than _____ starting excavation work. A. 1 day before ... 14 days before B. 2 days before ... 14 days after C. 2 days before ... 14 days before D. 3 days before ... 28 days after

C. 2 days before ... 14 days before

How long should a contractor keep employee records? A. 1 year B. 2 years C. 3 years D. for as long as the employee is employed

C. 3 years

In most construction contracts, the retention may be held for up to _____ days as a guarantee that the prime pays the subcontractors and suppliers. A. 10 B. 30 C. 60 D. 90

C. 60

If no notice of completion or cessation is given on a job, how many days does a contractor have to file a mechanics' lien after completion of work? A. 30 days B. 60 days C. 90 days D. 180 days

C. 90 days

What is the best way to determine if your company is profitable? A. Ask the crew supervisors. B. Compare the size of inventory with last year's. C. Examine the income and expense statement. D. Examine the balance sheet.

C. Examine the income and expense statement.

What is the best way for a contractor to ensure that materials are delivered at the right time to a job site? A. Walk the job site. B. Ask the crew supervisors. C. Follow the critical-path method. D. Ask material suppliers when to deliver.

C. Follow the critical-path method.

As a subcontractor on a public work of improvement, you complete your contract in a workmanlike manner. But the prime contractor, Mr. Adams, informs you that he cannot pay you. One of your best options is to file a stop notice, which has what effect? A. It starts foreclosure proceedings. B. It instructs Mr. Adams to "stop" work until you are paid, or else face felony charges. C. It creates a lien on the construction funds. D. It creates a lien on the property you improved.

C. It creates a lien on the construction funds.

In the absence of a collective bargaining agreement, two employees filed a written complaint with DOSH because of unsafe working conditions. The contractor discovered who the employees were and fired them because of the complaint. What would probably happen if the employees appealed the termination? A. Nothing: A contractor may fire any employee for any reason. B. Nothing: There is no appeals board for such cases. C. The contractor must reinstate the employees and reimburse them for lost wages and benefits. D. The contractor must reinstate the employees but is not required to reimburse them for lost wages and benefits.

C. The contractor must reinstate the employees and reimburse them for lost wages and benefits.

An owner is having a difficult time making progress payments on time. What should a contractor do to protect herself? A. The contractor should meet with the owner to set up a new payment schedule. B. The contractor should hire an attorney. C. The contractor should ask the owner to open an escrow account. D. The contractor should file a mechanics' lien.

C. The contractor should ask the owner to open an escrow account.

There is a near-miss safety situation on a job. What steps should the employer take? A. Report the near-miss to DOSH. B. Report the near-miss to the workers' compensation insurance carrier. C. The unsafe situation must be investigated, and the investigation must include a written report. D. The unsafe situation must be investigated, but a written report is not required.

C. The unsafe situation must be investigated, and the investigation must include a written report.

For which of the following injuries does Cal/OSHA require employers to make and keep records? A. Worker is knocked unconscious but returns to work after resting for one hour. B. Worker suffers a burn that requires a one-time visit to the doctor. C. Worker develops a chronic allergy after repeated exposure to fiberglass insulation. D. All of the above.

C. Worker develops a chronic allergy after repeated exposure to fiberglass insulation.

A balance sheet shows: A. revenues and expenses over an extended period of time B. assets and liabilities over an extended period of time C. assets and liabilities at a certain point in time D. revenues and expenses at a certain point in time

C. assets and liabilities at a certain point in time

Which financial ratio measures liquidity? A. current ratio B. acid-test ratio (quick ratio) C. both of the above D. neither of the above

C. both of the above

If a contractor violates the safety code and an employee is injured, who will be held responsible? A. architect B. employee C. contractor D. owner

C. contractor

Who is in charge of safety at a job site? A. foreperson B. labor specialist C. contractor D. most experienced worker

C. contractor

Who is responsible for keeping track of change orders? A. owner B. foreperson C. contractor D. supervisor

C. contractor

Who is responsible that safety equipment is actually put to use on the jobsite? A. foreperson B. lead worker C. contractor D. a specially designated employee

C. contractor

If you are required to report employment taxes or give tax statements, the _____ must obtain a federal Employer Identification Number. A. employee and employer B. employee C. employer D. bookkeeper

C. employer

The "Notice to Owner" is given to: A. inform the owner when work will begin and end B. inform the owner that you are going to improve the property C. let the owner know the property can be liened D. let the owner know a mechanics' lien has been filed against the property

C. let the owner know the property can be liened

How often are FUTA tax deposits made by most employers? A. weekly B. monthly C. quarterly D. yearly

C. quarterly

An employer who receives a citation for a serious violation of Cal/OSHA regulations can be assessed a penalty of up to _____ for each violation. A. $1,000 B. $5,000 C. $10,000 D. $25,000

D. $25,000

An employer must file federal Form 1099-MISC to report payments of _____ or more per calendar year to persons not treated as employees (e.g., independent contractors) for services performed for the business. A. $200 B. $300 C. $450 D. $600

D. $600

Direct costs are $7,200, overhead is 12%, and profit is 10%. What is the selling price? A. $7,389.50 B. $8,326.28 C. $9,132.37 D. $9,230.77

D. $9,230.77

After a home improvement contract is signed, the contractor must substantially begin work within _____ days of the date specified in the contract. A. 5 B. 10 C. 15 D. 20

D. 20

Which of the following is a correct statement about budgets? A. Budgets do not require accurate books. B. Budgets do not require detailed cost information. C. The goal of a budget is to forecast expenses as accurately as possible. D. A budget should allow leeway for month-to-month variations.

D. A budget should allow leeway for month-to-month variations.

_____, although usually the largest single item in a bid, can be fairly accurately determined. A. Permits B. Overhead C. Labor D. Materials

D. Materials

Bob Smith is the RME for the XYZ Construction Co., where he works all week. His own construction business, under a different name and license number, builds decks on weekends. Is this an acceptable practice for Bob? A. Yes: Bob may qualify as many licenses as he desires. B. Yes: Bob may qualify both licenses provided that he is regularly employed by XYZ and is actively involved in the operation of the business at least 32 hours per week or 80% of XYZ's total operating hours per week, whichever is less. C. No: Bob must take another qualifying exam to qualify a second license. D. No: Bob may qualify only XYZ Co.'s license in this case.

D. No: Bob may qualify only XYZ Co.'s license in this case.

An employer hires one part-time and two full-time employees. The full-time employees are covered by workers' compensation insurance, but not the part-time employee. Is this lawful? A. Yes: Part-time employees do not have to be covered. B. Yes: If all of the full-time employees are covered, the part-time employee does not have to be. C. Yes: If the company has less than 10 employees, part-time employees do not have to be covered. D. No: Even part-time employees must be covered.

D. No: Even part-time employees must be covered.

Your bid on a job was accepted, but you inadvertently left out a part of that job. What should you do? A. Write a change order and get it signed by the owner. B. Add the additional cost to the end of the job and say nothing about it. C. Do the omitted portion of the job on a time-and-materials basis. D. The contractor is responsible for the work.

D. The contractor is responsible for the work.

A licensed contractor contracts with a building owner to do a $900 improvement. When applying for a building permit, the contractor checks the owner-builder box on the declaration form. Which of the following statements is correct? A. The contractor may check the box to avoid insurance charges. B. The contractor should check the box so that the owner-builder verification will be mailed to the owner. C. The contractor may check the box because the contractor is the owner's employee. D. The contractor may not check the owner-builder box because the owner contracted for the improvement.

D. The contractor may not check the owner-builder box because the owner contracted for the improvement.

A prime contractor decides to sub out the electrical work. How would the prime determine what price to add for the electrical work? A. The prime calls up the electrical material supplier and calculates the bid amount. B. The prime gets an estimate from the subcontractor. C. Everybody charges a flat rate. D. The prime gets a firm bid from the subcontractor.

D. The prime gets a firm bid from the subcontractor.

A contractor has been turned in to DOSH by an employee for a safety violation. The contractor wants to find out who reported the violation and asked DOSH for the employee's name. What will DOSH likely do? A. Through due-process procedures, DOSH will identify the employee, but no retaliation may be directed at the employee. B. Through due-process procedures, DOSH will identify the employee, but the employee may not be fired. C. DOSH will release the employee's name for a fee, and the contractor may deal with the employee in any way the contractor chooses. D. Unless requested otherwise, DOSH will keep confidential the name of any person making a complaint, and no retaliation may be directed at the employee if the employee's identity is discovered.

D. Unless requested otherwise, DOSH will keep confidential the name of any person making a complaint, and no retaliation may be directed at the employee if the employee's identity is discovered.

If a contractor has temporary cash-flow problems, what is a good way to get through the crisis? A. Hold off paying the materials bill. B. Delay paying the employees. C. Apply for a construction loan. D. Use funds from a pre-established line of credit.

D. Use funds from a pre-established line of credit.

A contractor buys a construction firm from a person who is retiring. There is an existing collective bargaining agreement with a successor clause that is good for three years. As the new owner, is the contractor bound by the collective bargaining agreement? A. No. The contractor never personally consented to the collective bargaining agreement. B. No. A successor clause in a collective bargaining agreement is not binding on a successor for more than a year. C. No. Successor clauses in collective bargaining agreements are illegal. D. Yes. A successor clause in a collective bargaining agreement is binding on a successor for up to three years.

D. Yes. A successor clause in a collective bargaining agreement is binding on a successor for up to three years.

Suppose you include depreciation on your income statement your first year in business, but you do not include it in the second year. How will this affect your net income being reported? A. It is illegal to omit depreciation. B. Your net income will be the same for both years. C. Your net income will be less than it should be in the second year. D. Your net income will be greater than it should be in the second year.

D. Your net income will be greater than it should be in the second year.

The required Injury and Illness Prevention Program (IIPP) takes the form of: A. a written plan oral safety talks supplemented by a written plan B. an oral or written plan approved by the contractor and C. an employee representative D. a written plan that includes procedures and that is put into practice and documented

D. a written plan that includes procedures and that is put into practice and documented

What is the penalty for obtaining and providing to another any part of the exams administered by the Contractors' State License Board? A. $500 fine B. misdemeanor conviction C. the exam will be forfeited, and the applicant may not reapply for one year D. all of the above

D. all of the above

A contractor finds a 6" discrepancy on a set of plans. The contractor should: A. make the correction B. contact the owner C. ignore the discrepancy because it is minor D. contact the architect or the building designer

D. contact the architect or the building designer

A contractor's license has expired. How long after the date of expiration does the contractor have to renew the license before it becomes void? A. 90 days B. one year C. three years D. five years

D. five years

Which funds does the stop notice block? A. from the owner to the material supplier B. from the prime contractor to the subcontractor C. from the owner to the subcontractor D. from the owner to the prime contractor

D. from the owner to the prime contractor

Before you build on landfill you must notify: A. government B. engineers C. architect D. government/engineers

D. government/engineers

How often should the safety supervisor be at the job site? A. once a week B. only when dangerous equipment is used or about to be used C. once a day D. it depends on the work being done

D. it depends on the work being done

An income statement shows: A. assets and liabilities over an extended period of time B. revenues and losses at a certain point in time C. assets and liabilities at a certain point in time D. revenues and expenses over an extended period of time

D. revenues and expenses over an extended period of time

Which building code should a contractor follow? A. none of the below B. the national code C. the state code D. the local code

D. the local code

A construction company was hiring a new crew and asked each prospective employee for their name, address, and Social Security number. Several prospective employees remembered their Social Security numbers but did not have a card or other documentation. The practice of relying on memorized Social Security numbers is: A. acceptable: A memorized Social Security number is sufficient. B. acceptable: New employees do not have to provide documentation of their Social Security number. acceptable: Employees must show documentation of their C. Social Security number only if they are resident aliens working in this country. D. unacceptable: The actual Social Security card should have been inspected.

D. unacceptable: The actual Social Security card should have been inspected.

Excavators must clearly mark the boundaries of a work area, usually with _____ paint. A. red B. yellow C. brown D. white

D. white