LAW & BUSINESS
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? $900 $700 $1,000 $1,500
Correct answer: $1,000 Additional Notes: For employees performing on-site construction work, federal law requires time-and-a-half overtime pay after 40 hr of work per week--regardless of whether the employee is hourly, salaried, does piece work, etc. This right may not be waived, nor may straight-time compensatory time be given. 40 x $10 = 400 20 x $15 = 300 30 x $10 =300 Therefore, the total is $1000
The minimum fine for unlawful asbestos removal is: $1,000 $3,000 $7,000 $5,000
Correct answer: $1,000 Additional Notes: Section 7028.1 (a) of the Business and Professions Code states, "Conviction of a first offense is punishable by a fine of not less than one thousand dollars ($1,000) or more than three thousand dollars ($3,000), and by possible revocation or suspension of any contractor's license. "
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. $1,000 $25,000 $5,000 $10,000
Correct answer: $25,000 Additional Notes: The penalty used to be $7,000 for a serious violation. The penalty was recently increased to $25,000.
Direct costs are $37,000, overhead is 12%, and profit is 5%. What is the selling price? $43,383.37 $41,373.45 $39,272.47 $44,578.31
Correct answer: $44,578.31 Additional Notes: The following solution is based on one of the references listed in the CSLB Study Guide. The solution may seem unorthodox, but you must follow each step to arrive at the State's answer. Sum of overhead and profit percentages = 12% + 5% = 17% Percent of selling price that is direct costs = 100% - 17% = 83% = .83 Selling price = $37,000 / .83 = $44,578.31 To check these calculations, add the subtotals: Direct costs = 44,578.31 x .83 = 37,000.00 Overhead = 44,578.31 x .12 = 5,349.40 Profit = 44,578.31 x .05 = 2,228.92 Total = 44,578.32
Construction or alteration of any building, highway, excavation, or other structure in the State of California requires a contractor's license if the total cost of one or more contracts on the project is: $500 or more in labor only $150 or more in labor only $200 or more in materials only $500 or more in labor and materials
Correct answer: $500 or more in labor and materials Additional Notes: The $500-or-more rule is based on the entire project. In other words, you may not divide a project into a series of smaller jobs, each amounting to less than $500, to avoid licensing requirements.
If a contract provides for a retention of 5% of a $135,000 total job price, how much may the owner withhold? $6,500 $6,750 $6,675 $6,700
Correct answer: $6,750 Additional Notes: $135,000 x .05 = $6,750
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. $300 $200 $600 $450
Correct answer: $600 Additional Notes: Form 1099-MISC does have to be filed if the $600 or more in payments were made to a corporation.
The CSLB has established a mandatory arbitration program of verified complaints in which the damages are : $7,500 or more $1,000 or less $7,500 or less $5,000 to $20,000
Correct answer: $7,500 or less Additional Notes: The CSLB has a mandatory arbitration program for disputes involving damages less than $7,500 and a voluntary arbitration program for disputes involving damages between $7,500 and $50,000. The pilot program for mandatory arbitration was used for settling disputes less than $5,000.
If an employee works 30 hours one week and 30 hours the second week at a wage of $ 12/hr, what will be the gross wages for the two-week period? $805 $740 $760 $720
Correct answer: $720 Additional Notes: 60 hr x $12/hr = $720
An employee works 60 hours in one week. If the hourly wage rate is $12, what are the gross wages? $1,080 $600 $960 $840
Correct answer: $840 Additional Notes: Gross wages = Regular Time + Overtime Regular Time = 40 hr x $12/hr = $480 Overtime = 20 hr x 1.5 x $12/hr = $360 Gross Wages = $480 + $360 = $840
Direct costs are $7,200, overhead is 12%, and profit is 10%. What is the selling price? $8,326.28 $9,230.77 $7,389.50 $9,132.37
Correct answer: $9,230.77 Additional Notes: The following solution is based on one of the references listed in the CSLB Study Guide. The solution may seem unorthodox, but you must follow each step to arrive at the State's answer. Sum of overhead and profit percentages = 12% + 10% = 22% Percent of selling price that is direct costs = 100% - 22% = 78% = .78 Selling price = $7,200 / .78 = $9,230.77 To check these calculations, add the subtotals: Direct costs = 9,230 77 x .78 = 7,200.00 Overhead = 9,230.77 x .12 = 1,107.69 Profit = 9,230.77 x .10 = 923.08 Total 9,230.77
How many employees must an employer have before he must apply for workers compensation insurance? 3 or more 0 2 or more 1 or more
Correct answer: 1 or more Additional Notes: Employers are required to have a workers compensation insurance policy for all employees.
How many employees must an employer have before she must make disability insurance deductions? 1 or more 0 3 or more 2 or more
Correct answer: 1 or more Additional Notes: You don't "apply" for state disability insurance (SDI). It is paid for by making the required tax deduction for each employee, but not the employer herself.
What kind of discount do lumber yards and other suppliers offer to contractors who pay their bills promptly? 1/2% - 1% 1% - 2% 4% - 8% 10% - 12%
Correct answer: 1% - 2% Additional Notes: Answer is based on the references listed in the CSLB Study Guide. In practice, the discounts can be higher than 2%.
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? 6 10 8 12
Correct answer: 10
The prime contractor must pay the subcontractor within how many days after receiving a progress payment? 6 days 10 days 15 days 20 days
Correct answer: 10 days
A notice of completion must be recorded within: 10 days after work has ceased 10 days after work is completed 30 days after work is completed 60 days after work has ceased
Correct answer: 10 days after work is completed Additional Notes: The notice of completion must be filed with the County Recorder's office within 10 days after completion of work.
When is an employer not required to keep written health records? 20 employees or less 10 employees or less 30 employees or less when the business is family operated
Correct answer: 10 employees or less
How much can a contractor raise his prices during a declared state of emergency and not be guilty of price-gouging? 10% 5% 20% 15%
Correct answer: 10% Additional Notes: When a state of emergency is declared, it is a misdemeanor to raise prices for cleanup, repair, or reconstruction services by more than 10% for a period of 180 days. (Unless you can prove that the price increase was a direct result of increased costs for labor and/or materials.) Consumer goods are limited to the 10% mark-up for 30 days.
The typical retention, especially on public works or large jobs where an architect is involved, would be: 25% of the total job price 5% of the total job price 10% of the total job price 10% of the first draw
Correct answer: 10% of the first draw Additional Notes: Two references listed in the CSLB Study Guide for the Law and Business Exam contradict one another on this point. One states: "On some jobs, particularly large ones where public money or an architect is involved, the buyer may hold back a percentage--usually 10 percent of your first draw--as a retainer until the job is complete." According to another reference, the typical contract provides for a retention equal to 10% of the job price. If you receive a question like this, you should fill out a protest form. For the time being, answer "10% of the first draw" is our choice. We believe the CSLB based their question on the passage quoted above.
What percentage of the normal wage must you pay a minor? 100% 80% 110% 90%
Correct answer: 100% Additional Notes: Labor Code Section 1391.2 states, "no employer shall pay a minor ... at wage rates less than the rates paid to adult employees in the same establishment for the same quality and quantity of the same classification of work."
Every employer of ______ or more full- or part-time employees must keep written health and safety records for ______ years. 10 / 3 1 / 3 7 / 4 11 / 5
Correct answer: 11 / 5 Additional Notes: Employers with 11 or more employees must keep Cal/OSHA records on a calendar-year basis. The records must be retained for at least five years.
You have been awarded a job. It requires two days for site preparation and one day for clean-up. The contract involves two separate tasks--one lasting seven days and the other 10 days. If the two tasks can be done simultaneously, for how many days should you schedule the job? 20 days 7 days 15 days 13 days
Correct answer: 13 days Additional Notes: 2 ( site prep) + 1 (clean-up) + 10 (simultaneous jobs) = 13 days
By law, a 'hard laborer' may not be younger than _______ years old. 17 14 15 16
Correct answer: 16 Additional Notes: Labor Code Section 1294 prohibits the employment of minors under 16 years of age for heavy work (hard labor) in the building trades. Minors are also prohibited from working in tunnels and excavations, or on scaffolding.
What is the maximum span and height of a ladder jack scaffold? 16' span, 16' height 12' span, 16' height 18' span, 16' height 14' span, 16' height
Correct answer: 16' span, 16' height
Disabled access laws went into effect in ________ for public buildings and in _______ for private buildings. 1970 / 1971 1960 / 1961 1968 / 1970 1975 / 1976
Correct answer: 1968 / 1970 Additional Notes: Section 4450 of Chapter 7 of the Government Code, which requires accessibility in publicly funded buildings, was adopted in 1968. Section 19955 of Part 5.5 of the Health and Safety Code, which requires accessibility in privately funded buildings, was adopted in 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: 1985 1968 1982 1978
Correct answer: 1978 Additional Notes: "AB 2040" means Assembly Bill 2040. The law was originally introduced in the California State Assembly.
Before beginning work, an employer or contractor must inquire whether asbestos is present in any building constructed prior to : 1985 1975 1978 1990
Correct answer: 1978 Additional Notes: The employer or contractor must ask the owner whether asbestos is present and document the owner's response.
Except in an emergency, you must notify the regional Underground Service Alert Notification Center no less than __________ nor more than __________ starting excavation work. 1 day before '" 14 days before 3 days before ... 28 days after 2 days before ... 14 days before 2 days before ... 14 days after
Correct answer: 2 days before ... 14 days before Additional Notes: When you call the regional "Dig-Alert" notification center, you will receive an identification number and information on underground installations in the area.
After a home improvement contract is signed, the contractor must substantially begin work within _______ days of the date specified in the contract. 20 5 15 10
Correct answer: 20 Additional Notes: Work may be delayed for a lawful excuse such as an act of God, unusually severe weather, unforeseeable labor disputes, inability to obtain materials, etc.
How long should a contractor keep employee records? 1 year 3 years 2 years for as long as the employee is employed
Correct answer: 3 years
A subcontractor or material supplier has _________ days to file a lien once a notice of completion has been recorded. 10 30 60 90
Correct answer: 30 Additional Notes: Subcontractors and material suppliers usually have 90 days from completion to file liens. The recording of a notice of completion shortens the lien-filing period to 30 days.
How many days of inactivity must pass before a notice of cessation may be recorded? 90 days 10 days 60 days 30 days
Correct answer: 30 days Additional Notes: A notice of cessation may only be recorded after work has stopped for 30 consecutive days.
A contractor's license should be renewed: within three years after expiration on the day of expiration within the grace period of 30 days after the license expires 30 days before expiration
Correct answer: 30 days before expiration Additional Notes: It is best to renew your license four weeks before the due date to allow for processing time. It may be renewed etc. any time up to five years after expiration, but you must pay a delinquent fee. Also, it is illegal to contract for work over $500 while your license is expired.
When should a contractor renew the contractor's license bond? the day it expires 30 days before it expires 10 days before it expires within 30 days after it expires
Correct answer: 30 days before it expires Additional Notes: The CSLB staff processes thousands of bonds each month. The Contractors License Law and Reference Book states, "To allow for processing time, arrange for a new bond four weeks before the old one expires."
The qualifying RME for a construction firm must work at least: 12 hr per week or 51 % of the work week 32 hr per week or 80% of the work week 30 hr per week or 70% of the work week 24 hr per week or 65% of the work week
Correct answer: 32 hr per week or 80% of the work week Additional Notes: The RME must be regularly employed by the construction firm and must be actively involved in the operation of the business at least 32 hours per week or 80% of the business total operating hours per week--whichever is less.
A consumer may cancel a home solicitation contract at any time prior to midnight of the ___ after the date of the transaction. 7th calendar day 2nd business day 5th business day 3rd business day
Correct answer: 3rd business day Additional Notes: Civil Code Section 1689.6(a) states: "The buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase.
How long must an employer keep records of FUTA and other federal payroll taxes? 4 years 2 years 10 years 6 years
Correct answer: 4 years Additional Notes: All records of employment taxes must be kept for a minimum of 4 years. This requirement is not limited to payroll tax returns. An employer may be asked to produce the names, addresses, social security numbers, dates of employment, and work classification of every person employed. The IRS may also request verification of the dates and amounts of tax deposits.
By law, the maximum hours in a week a minor may work is: 40 30 45 35
Correct answer: 40 Additional Notes: Again, this is the maximum for when school is not in session. During school, 14- or 15-year olds can work up to 18 hours in a week. (It should be noted that 16- and 17-year olds can work up to 48 hours in a week, regardless of school, so long as they don't work more than the maximum for any given day. Based on the answer choices, this is the best choice.)
Insured employers must report every work-related illness or injury to their workers' compensation carrier within _________ of the incident. 2 days 24 hours 5 days 10 days
Correct answer: 5 days Additional Notes: If the employer is self-insured, the report should be filed with the Division of Labor Statistics and Research.
A Cal/OSHA permit is required for trenches that are ______ or more in depth. 5 feet 4 feet 8 feet 6 feet
Correct answer: 5 feet Additional Notes: This five-foot rule applies to all excavations into which workers are required to descend.
Who pays FICA? employee employer 50% employer and 50% employee 90% employer and 10% employee
Correct answer: 50% employer and 50% employee Additional Notes: The employer and employee contribute equally to FICA. The employee's share of FICA is deducted from the employee's wages.
How deep must asbestos be buried within 24 hours of delivery at a disposal site? 6 inches 10 inches 18 inches 12 inches
Correct answer: 6 inches Additional Notes: Asbestos must have 6 inches of covering within 24 hours after delivery at a disposal site. But be careful about how this question is phrased. The final covering over asbestos must be an additional 30 inches (for a permanent total of 36 inches).
What is the maximum penalty for working as a contractor with a license that has been revoked, suspended, or has lapsed? 3 years probation 6 months in jail and $15,000 fine 1 year in jail 3 years in prison
Correct answer: 6 months in jail and $15,000 fine Additional Notes: This is the maximum penalty for working without a valid contractor's license. Obviously, you're more likely to get the maximum penalty if your license was revoked than if it merely lapsed, but it's a big risk either way! The penalties are even steeper if you're working during a declared state of emergency.
When a notice of completion has been filed, the original contractor has __ days to record a lien. 90 20 30 60
Correct answer: 60 Additional Notes: Ordinarily, the original (prime) contractor has 90 days from completion of work to file a lien. However, if the owner files a notice of completion, the original contractor has only 60 days from recording of the notice to file a lien.
In most construction contracts, the retention may be held for up to ________ days as a guarantee that the prime pays the subcontractors and suppliers. 60 90 30 10
Correct answer: 60 Additional Notes: Retentions usually correspond with the expiration of the filing periods for liens and stop notices. If a notice of completion or cessation is filed, subcontractors and suppliers have 30 days to record liens or serve stop notices, and the prime contractor has 60 days to record a lien.
How long does a client have to cancel a contract for repairs that are the result of an event for which a State of Emergency was declared? 7 calendar days 5 business days 5 calendar days 7 business days
Correct answer: 7 business days
What is the maximum allowed travel distance from any point of a work area to a fire extinguisher? 150 feet 25 feet 50 feet 75 feet
Correct answer: 75 feet
By law, the maximum hours in a day a minor may work is: 9 6 7 8
Correct answer: 8 Additional Notes: This is the maximum for a non-school day. For school days, the maximum for 14- or 15-year olds is 3 hours, and 4 hours for 16- or 17- year olds.
What is the maximum number of hours a minor can work on the day before a school day? 9 6 7 8
Correct answer: 8 Additional Notes: The day "before a school day" is a non-school day.
If a contractor changes a business name or address or has any changes in the personnel listed on the license, the Registrar must be notified within: 90 days 10 days 60 days 45 days
Correct answer: 90 days Additional Notes: All notices for a change in business name, address, or personnel must be made in writing within 90 days. Call the CSLB and ask for the appropriate form.
How many days does a contractor have to notify the Registrar after being issued a workers' compensation insurance policy? 10 days 5 days 90 days 30 days
Correct answer: 90 days Additional Notes: You must notify the Registrar within 90 days after you are issued a workers' compensation insurance policy. The notice must be in writing and contain the name and address of the insurance company that issued the policy. This was recently increased from 10 days.
If no notice of completion or cessation is given on a job, how many days does a contractor have to file a mechanic's lien after completion of work? 90 days 30 days 180 days 60 days
Correct answer: 90 days Additional Notes: If neither notice is given, all claimants have 90 days from completion of work to file liens.
DOSH has the power to stop work on a job due to unsafe conditions for: 72 hours 8 hours 24 hours 96 hours
Correct answer: 96 hours Additional Notes: An order prohibiting work is usually in effect for 24 hours but can be extended to 96 hours or more.
Which of the following is a correct statement about budgets? Budgets do not require detailed cost information. Budgets do not require accurate books. A budget should allow leeway for month-to-month variations. The goal of a budget is to forecast expenses as accurately as possible.
Correct answer: A budget should allow leeway for month-to-month variations. Additional Notes: Expenses vary from month to month. For example, annual bonuses for employees increase the December payroll. December's bills might also include annual trade association dues or insurance premiums covering the next year. The budget does not forecast expenses; it establishes the ideal level of expense and income.
John Meyers, a general contractor, had a contract with Mr. and Ms. Barnes to construct a gazebo and deck in their back yard. John was behind schedule and hired his 18-year-old son, Bart, to help on a part-time basis. After working on the project for a month, Bart slipped on a plank that John had laid across the deck but did not nail securely. As a result of the fall, Bart broke his leg. John is insured for workers' compensation, but Bart wants to sue his father for negligence in a civil action. Which of the following statements is CORRECT? John is not liable for damages in a civil action because the injured employee is his son. A civil action is not a possibility when the dispute involves a job-related injury, unless the employer is not insured for workers' compensation. This case would be handled by the Department of Industrial Relations. John is liable for damages in a civil action and must prove that the injury did not result from his negligence. In a civil action, John may use the defense that the injury was the result of the contributory negligence of his son.
Correct answer: A civil action is not a possibility when the dispute involves a job-related injury, unless the employer is not insured for workers' compensation. This case would be handled by the Department of Industrial Relations. Additional Notes: Since John is insured for workers' compensation, Bart must file a claim with John's insurance carrier. If John and his carrier dispute the claim, the matter may be referred to the Workers' Compensation Appeals Board, which is part of the Department of Industrial Relations.
Which of the following statements is most correct? A contractor must have a license number to advertise. All advertisements must include the contractor's name, address, and telephone number. The address of the CSLB must be on all advertising. A contractor's license number must be on all forms of advertising.
Correct answer: A contractor's license number must be on all forms of advertising. Additional Notes: "A contractor must have a license number to advertise" is incorrect because unlicensed contractors may advertise for jobs under $500. But note that Business and Professions Code Section 7027.2 requires contractors to state in the ad that they are not licensed.
Which of the following is not a misdemeanor? A home improvement salesperson failed to give the contractor a $50 down payment the salesperson received from the customer. A home improvement salesperson failed to disclose the name of the contractor on a home improvement contract form. A home improvement salesperson gave a homeowner $20 for each new customer the homeowner referred to the salesperson. A home improvement salesperson gave a prospective customer an unconditional gift valued at $5 as part of a sales promotion.
Correct answer: A home improvement salesperson gave a prospective customer an unconditional gift valued at $5 as part of a sales promotion. Additional Notes: A salesperson may give a gift not exceeding $5 in value if the gift is not conditioned on obtaining a home improvement contract.
Which of the following is not eligible to receive benefits from a contractor's license bond? A subcontractor involved in an accident on the job site. A customer who was defrauded by the contractor. A homeowner with a valid claim that the contractor abandoned the job. An employee who was not paid wages that were due.
Correct answer: A subcontractor involved in an accident on the job site. Additional Notes: Business and Professions Code Section 7071.5 states, "The contractor's bond shall be for the benefit of the following: (a) Any homeowner contracting for home improvement upon the personal family residence damaged as a result of a violation of this chapter by the licensee. . . (c) Any employee of the licensee damaged by the licensee's failure to pay wages."
What happens after an employee's taxable wages exceed $7,000? Nothing: FUT A is not subject to a wage limit. After $7,000, the employer does not pay FUTA. After $7,000, the FUTA rate increases. After $7,000, the FUTA rate decreases by 50%.
Correct answer: After $7,000, the employer does not pay FUTA. Additional Notes: Currently, the FUTA tax applies to the first $7,000 in wages paid to an employee during the calendar year.
When should you let your attorney see a construction contract? After the building permit is obtained. Before you let your client see the contract. After the contract is prepared, but before you sign it. After the contract is signed by you and your client.
Correct answer: After the contract is prepared, but before you sign it. Additional Notes: Your attorney must study the entire contract, including any alternative language suggested by your client. The best time for a review would be just before you and your client sign the contract.
A schedule of payments in a home improvement contract must include which of the following details? specific reference to the materials and equipment to be supplied amount of each payment as a sum in dollars and cents specific reference to the amount of work and services to be performed All are correct
Correct answer: All are correct
What is the maximum penalty for a contractor convicted of price-gouging during a declared state of emergency? All are correct permanent license revocation by CSLB 1 year in jail $10,000 fine
Correct answer: All are correct Additional Notes: A contractor would be guilty of "price-gouging" if they were to raise their prices for cleanup, repair, or reconstruction services by more than 10% within 180 days of a declared state of emergency.
Federal regulations on overtime apply to: piece work All are correct hourly employees salaried employees
Correct answer: All are correct Additional Notes: According to the Fair Labor Standards Act, all employees may be paid regular time for up to 40 hours in a week. After 40 hours, they all must be paid time-and-a-half.
If a contractor fails to pay workers, they can place a lien on a house, and the contractor may face a disciplinary action. Why is this also a problem for an owner who has already paid the contractor for all completed labor? the house can be sold by a sheriff to pay the workers the rest of the job might not be completed the owner might still legally owe the workers All are correct
Correct answer: All are correct Additional Notes: The owner can lose control over the title, or worse. If that disciplinary action resulted in a suspended license, the contractor might be unable to complete this job or to earn money from other jobs with which to pay the debt. If the workers remain unpaid, the court may sell the property in order to pay the workers.
Which of the following is/are grounds for a disciplinary action? failure to provide the owner with a Notice to Owner All are correct failure to pay employees after being paid by the owner failure to complete a project for the price in contract
Correct answer: All are correct Additional Notes: There are a number of other causes for disciplinary actions. These are a few you should be familiar with.
Which of the following is a true statement about payroll taxes? Bartered goods are not subject to taxes. All wages are subject to taxation. Bonuses are not subject to taxes. Payroll taxes must be paid only once a year.
Correct answer: All wages are subject to taxation. Additional Notes: Bartered goods are taxable based on fair market value.
An employee has a deep gushing wound on the forearm. What should you do to control bleeding? Apply a tourniquet. Apply direct pressure to the wound. Apply pressure to the brachial artery. Apply pressure 6" below the wound or joint.
Correct answer: Apply direct pressure to the wound. Additional Notes: The American Red Cross recommends that you elevate the arm and apply direct pressure over a dressing to the wound. If this does not stop the bleeding, apply pressure to the brachial artery, forcing it against the arm bone. Tourniquets are dangerous and should only be used for severe, life-threatening hemorrhages that cannot be controlled by any other means.
You sign a contract that includes fixing the hinges of a home owner's door. After finishing the work, the owner complains that you did not remove the dog scratches from the door's finish. Which is the best way to avoid a dispute or lawsuit? Schedule an on-site meeting with the owner. Write a change order. Be very specific about the work to be done: Review the contract and specifications line-by-line with the owner. Have an attorney explain the job description to the owner.
Correct answer: Be very specific about the work to be done: Review the contract and specifications line-by-line with the owner.
One of your customer's accounts has gone past 30 days. What is the best method of handling it? Send it to a collection agency. Begin to charge interest on the customer's account. Contact the customer and put them on a new payment schedule. Stop work immediately.
Correct answer: Begin to charge interest on the customer's account. Additional Notes: According to one of the references in the CSLB Study Guide, the best option would be to charge interest. Many invoices include a statement such as: "A finance charge of 1 % per month is charged on unpaid balances after 30 days."
To whom do you report and pay sales tax? County Tax Collector Franchise Tax Board Board of Equalization Internal Revenue Service
Correct answer: Board of Equalization Additional Notes: The Board of Equalization administers and enforces the California Sales and Use Tax Law.
When does the contractor pay for delivered materials? 30 days after delivery C.O.D. before delivery after the materials are installed
Correct answer: C.O.D. Additional Notes: According to one of the references listed in the CSLB Study Guide, "most suppliers will want to put you on a C.O.D. basis."
From where do you obtain permits for working in a hazardous area? Fed/OSHA Contractors' State License Board City Planning Commission Cal/OSHA
Correct answer: Cal/OSHA Additional Notes: Permits are issued by the Cal/OSHA Division of Occupational Safety and Health or "DOSH."
A job calls for the demolition of an old residence in order for a new residence to be built. Which of the following should be done? Remove any asbestos yourself, then demolish the building. Call a demolition subcontractor to remove any suspected asbestos before the inspector arrives. Demolish the building regardless of asbestos. Call an asbestos abatement contractor to check for asbestos.
Correct answer: Call an asbestos abatement contractor to check for asbestos.
What is the best way to establish if a contractor is duly licensed? Ask the contractor if he is licensed. Call the CSLB. Look at the contractor's pocket license. Ask to see the contractor's license bond.
Correct answer: Call the CSLB. Additional Notes: If you have a touch-tone phone, you can check the status of a contractor's license by caling the CSLB's Automated Phone Response System at (800) 321-2752. You can also call a CSLB information technician at (916) 255-3900.
Your employee sets a cabinet wrong. The cabinet falls from the wall and damages the client's counter top. What should you do? Tell the client to claim the damaged counter top on his or her homeowner's insurance policy. No action is required: The client must assume the risk of damage Require the employee to pay for the damage to the counter top. Claim the damage on your general liability insurance policy.
Correct answer: Claim the damage on your general liability insurance policy. Additional Notes: A general liability insurance policy will normally cover damage resulting from poor workmanship. In this case, poor workmanship in setting a cabinet resulted in damage to the counter top.
Without reducing risk, what is the best way to reduce insurance costs? Get a policy for overlapping coverage. Decrease the coverage. Increase the deductible. Compare premiums and coverage yearly.
Correct answer: Compare premiums and coverage yearly. Additional Notes: The California Contractors License Law and Reference Book states, "coverage should be reviewed yearly to reflect changes in the business." It also states, "insurance costs can be minimized by obtaining a number of quotes or by enrolling in special plans offered by trade associations. "
A contractor usually will not be held liable for a supplier going on strike, but if your supplier did go on strike what should you do? Contact the owner immediately Contact the architect immediately. Continue work as usual. Contact the general building contractor immediately
Correct answer: Contact the owner immediately Additional Notes: The contractor usually will not be held liable for a supplier or sub going out on strike, but the contractor has an obligation to notify the owner as soon as possible. A strike is generally considered to be an excusable delay if it is unforeseen and beyond the contractor's control.
A contractor has completed 60% of a job. The owner has not been paying the contractor for the work performed. The contractor has filed a mechanics' lien. What is the contractor's next step? Take the lien to court to obtain a judgment against the owner's property. Record a Notice of Cessation. Wait until the County Recorder has recorded the lien and send a copy to the owner. Continue working on the job.
Correct answer: Continue working on the job. Additional Notes: Read this question very carefully if you receive it on the State exam. Civil Code Section 3115 requires the original contractor to complete the contract before recording a lien. Therefore, the lien filed by the contractor in this question may not be enforceable. Furthermore, pulling off a job can be very risky. The owner could successfully argue that the payments were stopped because the contractor had breached the contract. Or the contract itself may contain a clause that obliges the contractor to continue working while attempting to resolve any disputes. You should always consult a lawyer before deciding to stop work on a job.
According to State law, what should an employer do if she notices an employee using defective machinery? Report the problem to Cal/OSHA. Correct the problem immediately. Report the problem to the prime contractor. Ask for a consultation with a safety engineer.
Correct answer: Correct the problem immediately. Additional Notes: There is an imminent hazard to the employee's safety, so do not wait to contact the prime.
A subcontractor must file a mechanic's lien with the: lender County Clerk owner County Recorder
Correct answer: County Recorder Additional Notes: A mechanics' lien is "recorded" by filing the lien form with the County Recorder's office in the county where the property is located. Later the lien is "perfected" by filing a foreclosure lawsuit.
An employee has been injured. First aid has been given and the paramedics have been called. What should be done next? Cover the victim with a blanket, and place the victim lying down with head up and feet down. Cover the victim with a blanket, and place the victim lying down with head down and feet up. Cover the victim with a blanket, and place the victim in a seated position. Cover the victim with a blanket, and place the victim in an upright position.
Correct answer: Cover the victim with a blanket, and place the victim lying down with head down and feet up. Additional Notes: The purpose of this procedure is to improve blood circulation to the brain and prevent shock.
If a contractor is doing asbestos-related work that involves 100 square feet or more, _________ must be notified. Registrar of Contractors EPA Fed/OSHA DOSH
Correct answer: DOSH Additional Notes: Labor Code Section 6501.5 states, "Any employer or contractor who engages in asbestos- related work shall register with the Division of Occupational Safety and Health."
An applicant for a contractor's license receives a notice from the Contractor's State License Board, dated October 1, that the applicant passed the written exams. To receive an active license, the applicant must file a license bond and fee no later than: October 31 December 30 October 29 January 1
Correct answer: December 30 Additional Notes: The applicant has 90 days from the date of the notice to file a license bond and fee. Remember that there are 31 days in October and 30 days in November. Count October 2 as Day 1.
You are bidding on a job with plans drawn by the owner. You notice a code violation and bring it to the attention of the owner. The owner declines to remedy the code violation and tells you not to worry. What should you do? Bid on the job as though it were to code. Bid on the job as though it were to code, but ask the owner to sign a release of your responsibility. Decline to bid on the work. Bid on the job with the corrections in mind, and perform the corrections yourself to bring the work up to code.
Correct answer: Decline to bid on the work. Additional Notes: A contractor who willfully violates a building code is subject to disciplinary action under Business and Professions Code Section 7110.
To which state agency does the employer send unemployment insurance taxes? Franchise Tax Board IRS Board of Equalization EDD
Correct answer: EDD Additional Notes: Notice that this question refers to a state agency. State unemployment contributions go to EDD. Federal unemployment contributions ("FUTA") are sent to the IRS.
Which state agency issues an employer's ID number? Secretary of State Department of Justice EDD IRS
Correct answer: EDD Additional Notes: Read this question very carefully if you receive it on the State exam. The IRS issues an employer's identification number known as the "EIN," but the IRS is a federal agency. Of the other possible answers, the Employment Development Department (EDD) is the only state agency that issues an ID number to each employer. It is called an "employer account number. "
How could a cash flow problem best be prevented? Each payment should relate to a definite stage of the project. Contract should specify 10% down and 80% along the way with a 10% retention. Owner should pay 50% of total contract at start of the job. Owner should pay in full at the start of the job.
Correct answer: Each payment should relate to a definite stage of the project. Additional Notes: Ask for payment at the beginning of a certain stage. One text recommends language such as, "Second draw due at the beginning of drywall application."
An employer remits State income tax and State disability taxes withheld from an employee's wages to what agency? Franchise Tax Board Employment Development Department Internal Revenue Service Board of Equalization
Correct answer: Employment Development Department Additional Notes: Check with your bookkeeper or accountant about deposit requirements. Although State income and disability taxes are reported on a quarterly basis, monthly or more frequent deposits may be required if you have a large payroll.
What is the best way to determine if your company is profitable? Compare the size of inventory with last year's. Ask the crew supervisors. Examine the income and expense statement. Examine the balance sheet.
Correct answer: Examine the income and expense statement. Additional Notes: The income and expense statement shows the profit (or loss).
What is the deadline for filing this year's employee W-2s with the Social Security Administration? July 1 January 1 April 15 February 28 (or last day of Feb.)
Correct answer: February 28 (or last day of Feb.)
What is the best way to monitor labor costs? Ask crew supervisors. Compare previous labor costs. Figure the hours from detailed time cards. Check the profit-and-Ioss statement.
Correct answer: Figure the hours from detailed time cards. Additional Notes: Time cards represent your primary source of labor data. Time cards should be detailed and include type of work, hours expended, skill level of the employee, etc.
What should be done with the contractor's copy of IRS Form W-2? Destroy the copy to protect the employee's right to privacy. Give the copy to the employee. Submit the copy with the contractor's payroll tax return. File the copy in the contractor's office.
Correct answer: File the copy in the contractor's office. Additional Notes: Form W-2 consists of several copies. The last copy, "Copy D For Employer," is for the contractor's records. It should be filed in the contractor's office with all other payroll tax related documents.
Of the following, which is the best example of a vague statement in a contract? The contractor warranties all work for one year. The second payment is due when 60% of the work is done. Fill in and smooth the dog scratches as much as possible and paint the door. Rehang the front door so that it closes and locks properly.
Correct answer: Fill in and smooth the dog scratches as much as possible and paint the door.
A mechanic's lien is a written document that must be signed and verified by the claimant. The first and third steps a contractor should take in filing a lien are listed below. Step 1: Obtain the exact legal description of the property. Step 2: Step 3: Find out if the person requesting the work of improvement is the owner. What is Step 2? Determine the amount of the lien claim. Find out the name of the legal owner of the property as well as the percent of ownership. List the attorney representing the contractor. List the attorney representing the owner.
Correct answer: Find out the name of the legal owner of the property as well as the percent of ownership. Additional Notes: According to the Contractors License Law and Reference Book, the second step is: "Determine the name of the owner and the extent of the owner's interest in the property."
What is the best way for a contractor to ensure that materials are delivered at the right time to a job site? Follow the critical-path method. Walk the job site. Ask material suppliers when to deliver. Ask the crew supervisors.
Correct answer: Follow the critical-path method. Additional Notes: The critical path method is a job scheduling technique. It is an excellent tool for coordinating each phase of the work, material deliveries, etc.
A contractor's California personal income tax return should be sent to which office? EDD Franchise Tax Board IRS Board of Equalization
Correct answer: Franchise Tax Board Additional Notes: A contractor's personal income tax return, Form 540, is sent directly to the Franchise Tax Board.
Where can workers obtain the name of the employer's current workers' compensation insurance carrier? Only if the employer chooses to disclose the name of the carrier. From the notice printed on every paycheck. From the notice that must be posted conspicuously in a location frequented by employees. By phoning the employer's insurance agent.
Correct answer: From the notice that must be posted conspicuously in a location frequented by employees. Additional Notes: Section 3550 of the Labor Code requires that the employer post a notice stating the name of the current carrier.
What should you do if a client is unhappy with your work? Keep working and leave the client alone to cool off. Handle the problem in a timely manner when it comes up. Continue working and worry about the client at the end of the job. Ignore the client until after all work is done.
Correct answer: Handle the problem in a timely manner when it comes up. Additional Notes: One of the references in the CSLB Study Guide states, "Don't let problems fester. Whether or not you think the owner is justified, listen and acknowledge what's said. Do your best to fix the situation immediately."
What must be done if changing "As Built" plans? The change order must be in writing. Have the customer, engineer, and architect approve the change and sign the order. Have the change order signed by your customer. Have the change order signed by your customer and the architect.
Correct answer: Have the customer, engineer, and architect approve the change and sign the order. Additional Notes: As Built plans show the actual installed dimensions and locations of piping systems, etc.
What is the purpose of the Cal/OSHA Consultation Service? Helps employers voluntarily follow safety and health laws and standards. Adopts safety and health laws and standards. Issues permits and registers contractors who do asbestos-related work. Makes decisions on appeals of citations for safety and health violations.
Correct answer: Helps employers voluntarily follow safety and health laws and standards. Additional Notes: The Consultation Service helps employers to identify workplace hazards and to develop solutions to safety and health problems. The service includes free on-site conferences. No citations are issued if the employer voluntarily makes any necessary corrections.
As required by the Immigration Reform and Control Act, all employees hired on or after November 7, 1986 must complete Form _______ to verify their employment eligibility status. I-9 W-4 N-14 US-99
Correct answer: I-9 Additional Notes: Form I-9 must be completed by all employees, including U.S citizens.
Harry and Linda have done business as a licensed partnership. If Linda is a general partner, but not the qualifier, what must she do to get an individual license? Linda is not entitled to apply for an individual license. If Linda was listed as a partner on the license and was actively engaged in the business for at least five of the past seven years, she may apply for a license with a waiver of the exam. If Linda applies for an individual license, the partnership license must be inactivated. General partners may automatically receive an individual license if they are listed on the partnership license.
Correct answer: If Linda was listed as a partner on the license and was actively engaged in the business for at least five of the past seven years, she may apply for a license with a waiver of the exam. Additional Notes: Since Linda is not the qualifier of the partnership license, she must document her work experience when applying.
Of the following, which is the most reasonable method of preventing disputes about change orders ? Include the change order procedure in the original contract. Explain the change order procedure at the time you request payment for the extra work. Negotiate a price for change orders after all work has been completed. Wait until a change is necessary before discussing change orders with the owner.
Correct answer: Include the change order procedure in the original contract. Additional Notes: You should also discuss change orders with the owner at the pre-construction meeting.
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? Bid the job as is. You can add change orders later. Tell the homeowner to consult an architect. Inform the homeowner that you cannot bid until the numbers add up. Make the corrections yourself and bid the job.
Correct answer: Inform the homeowner that you cannot bid until the numbers add up. Additional Notes: You must understand exactly what the owner wants before submitting a bid.
The federal Employer Identification Number (EIN) is issued by the: Internal Revenue Service Board of Equalization Employment Development Department Franchise Tax Board
Correct answer: Internal Revenue Service Additional Notes: The federal nine-digit EIN is used to identify the tax accounts of employers and certain others.
To whom does an employer pay FUTA tax? Employment Development Department Internal Revenue Service U.S. Department of Labor State Franchise Tax Board
Correct answer: Internal Revenue Service Additional Notes: Federal payroll taxes are collected by the IRS. FUTA is reported on Form 940 or Form 940- EZ.
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? It creates a lien on the construction funds. It creates a lien on the property you improved. It instructs Mr. Adams to "stop" work until you are paid, or else face felony charges. It starts foreclosure proceedings.
Correct answer: It creates a lien on the construction funds. Additional Notes: A stop notice is sometimes referred to as a "lien on funds."
How often are you required to pay sales tax? quarterly monthly It depends on the expected amount of taxable sales. annually
Correct answer: It depends on the expected amount of taxable sales. Additional Notes: Sales taxes are reported and paid on a quarterly basis. However, if taxable sales are high, prepayments may be required for the first two months of each quarter.
Your accountant advises you to set up a cost management system. What does this system do? It gives a cost history to analyze labor and material costs. It shows where profits and losses are. It compares what others are charging for subcontracted work. It shows costs of materials only.
Correct answer: It gives a cost history to analyze labor and material costs. Additional Notes: Usually a foreperson is provided with job record forms that are used to record the time it takes the crew to complete each phase of the work. Records are also kept of materials actually used for a given job.
Which of the following statements about the State safety code is correct? It is the only code you must consult. It is a complete code that adopts portions of local codes. It is a complete code that adopts all local codes. It has been stable for several years.
Correct answer: It has been stable for several years. Additional Notes: Safety requirements are reflected in numerous local, state, and federal laws and regulations. The bulk of the requirements relating to contractors in this state are found in Division 5 of the California Labor Code and Title 8 of the California Code of Regulations. Neither is considered a complete code.
Why would there be a difference between the actual inventory and the inventory shown on paper? It is a common occurrence because of factors such as theft, natural loss, and mistakes. You always underestimate what you have in inventory. There never is a substantial difference. You calculated what you have in inventory by subtracting only what goes into the finished product.
Correct answer: It is a common occurrence because of factors such as theft, natural loss, and mistakes. Additional Notes: Inventories must be inspected and revised regularly. At a minimum, the inventory form should include a stock number, description, quantity, and dollar value for each item.
Is it legal for a contractor to require employees to take lie detector tests? It is legal for the contractor to require lie detector tests, but it would not be legal for a federal, state, or local public agency to do so. It is not legal for any employer to require lie detector test It is not legal for the contractor to require lie detector tests, but it would be legal for a federal, state, or local public agency to require lie detector tests of their employees. It is only legal for the contractor to require lie detector tests of employees who have criminal records.
Correct answer: It is not legal for the contractor to require lie detector tests, but it would be legal for a federal, state, or local public agency to require lie detector tests of their employees. Additional Notes: Labor Code Section 432.2 prohibits private employers from requiring job applicants or employees to take polygraph (lie detector) tests as a condition of hiring or continued employment. Public agencies are exempt from this law.
A contractor has had a problem with employees stealing tools and equipment from job sites. When conducting job interviews, may the contractor ask prospective employees about their arrest records? It is not legal to ask prospective employees about arrests not leading to convictions. It is legal to ask prospective employees about arrests not leading to convictions. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal for a federal, state, or local public agency to do so. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be legal for city or county agencies to ask about such arrests.
Correct answer: It is not legal to ask prospective employees about arrests not leading to convictions. Additional Notes: In general, employers may not ask job applicants about arrests that did not lead to convictions. However, an employer may ask about an arrest for which an applicant is out on bail or on his or her own recognizance pending trial.
Unsafe or faulty equipment is found on a job site. What should be done? It is the employees' responsibility to correct the problem. It is the property owner's responsibility to correct the problem. The contractor should call Cal/OSHA It is the contractor's responsibility to correct the problem.
Correct answer: It is the contractor's responsibility to correct the problem. Additional Notes: As the employer, the contractor is responsible for providing safe equipment.
An employer must furnish an employee with a completed IRS Form W-2 (Wage and Tax Statement) by: April 15 January 1 January 31 the final day of employment
Correct answer: January 31 Additional Notes: W-2 and 1099 forms are due no later than January 31. If the forms are mailed, be sure the envelope is postmarked on or before January 31.
An active contractor's license is issued on January 18, 1995. On what date will the license expire? January 31, 1997 January 18, 1997 January 31, 1999 January 18, 1999
Correct answer: January 31, 1997 Additional Notes: An active license expires two years from the last day of the month in which the license was issued. In this case, the license was issued in January 1995. It expires on the last day of January 1997
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)? Make sure the effective date of the new bond is the day after the cancellation date of the old bond. Buy a second bond that overlaps coverage. Renew the bond seven days after expiration. Make sure the effective date of the new bond is the same as the cancellation date of the old bond.
Correct answer: Make sure the effective date of the new bond is the same as the cancellation date of the old bond. Additional Notes: Only one bond remains in effect at a given time.
If an owner cancels a home solicitation contract on March 20, by what date must the contractor return the down payment? March 30 March 23 April 20 April 1
Correct answer: March 30 Additional Notes: The contractor must return the owner's down payment within 10 days after the contract is cancelled.
The supplier of a potentially hazardous product must be able to provide a(n) ____ with that product. Hazard Evaluation System Information Services bulletin Certificate for Use Injury Illness and Prevention Program Material Safety Data Sheet
Correct answer: Material Safety Data Sheet Additional Notes: The Material Safety Data Sheet (MSDS) provides information on fire or explosion potential, possible health effects, symptoms of overexposure, first-aid procedures, etc.
________, although usually the largest single item in a bid, can be fairly accurately determined. Permits Materials Labor Overhead
Correct answer: Materials Additional Notes: Materials are usually the least difficult item to estimate. In many cases, material suppliers will help compile an estimate. But the accuracy of your material estimate depends on efficient purchasing as well as reducing waste at the job site.
Of the following, which is the best description of "accounts receivable"? Money owed to material suppliers for credit purchases. Business costs and expenses due and payable within the current accounting period. Accounts listed on the liability side of the balance sheet. Money due from customers who have purchased goods or services on credit.
Correct answer: Money due from customers who have purchased goods or services on credit. Additional Notes: For larger businesses, maintaining "accounts receivable" involves numerous entries. An entry must be made every time a customer is billed or a payment is received. Some contractors maintain an accounts receivable ledger, which is a subsidiary of the general ledger.
In which court do you pursue a lawsuit of exactly $25,000? Superior Small Claims Municipal District
Correct answer: Municipal Additional Notes: This is an older question that may still appear on the State exam. The California Superior and Municipal Courts have merged and all cases are now heard in Superior Court. Cases up to $25,000 are Lower Division and cases over $25,000 are Upper Division. In the past, lawsuits UP TO $25,000 were pursued in Municipal Court; those OVER $25,000 were pursued in Superior Court.
Which act establishes the rights of workers to organize into unions and negotiate contracts? National Labor Relations Act of 1935 Civil Rights Act of 1964 Civil Rights Act of 1984 CiviI Rights Act of 1972
Correct answer: National Labor Relations Act of 1935
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? Lower your bid to cost and hope to recover the overhead later. Decline the work. Negotiate with the homeowner to reduce the scope of the work by eliminating some of the extra items. Lower your bid to cost and overhead only (eliminate the profit).
Correct answer: Negotiate with the homeowner to reduce the scope of the work by eliminating some of the extra items. Additional Notes: You should first offer to negotiate if the owner appears to be bargaining in good faith. One approach would be to ask what the owner's budget is and then discuss the items that can included for that price range. If the owner is not willing to compromise and you cannot make a profit, then decline the work.
Is Form 1099-MISC required for a corporation that provided $600 in services as an independent contractor during the calendar year? No. A 1099 is not required unless an independent contractor is paid over $1,000 in a calendar year. Yes. A 1099 is required because the corporation is an independent contractor that was paid $600 or more. No. A 1099 is not required for a corporation. Yes. A 1099 is required for individuals and corporations.
Correct answer: No. A 1099 is not required for a corporation. Additional Notes: The California Contractors License Law and Reference Book states: "You must file a Form 1099-MISC, Statement for Recipients of Miscellaneous Income, for each non-employee (such as independent contractors), other than corporations, to whom you have paid at least $600 as compensation for services in a calendar year."
Is it legal for a contractor to hire professional strikebreakers to replace striking employees? No. The contractor is subject to a maximum fine of $500 and/or a maximum jail sentence of 30 days. Yes. It is legal to hire professional strikebreakers. No. The contractor is subject to a maximum fine of $1,000 and/or a maximum jail sentence of 90 days. The contractor has not committed a crime but may be subject to legal action.
Correct answer: No. The contractor is subject to a maximum fine of $1,000 and/or a maximum jail sentence of 90 days. Additional Notes: Replacing employees with professional strikebreakers is a misdemeanor punishable by a fine of up to $1,000 and/or a jail sentence for up to 90 days.
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? Yes: Bob may qualify as many licenses as he desires. No: Bob may qualify only XYZ Co.'s license in this case. 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. No: Bob must take another qualifying exam to qualify a second license.
Correct answer: No: Bob may qualify only XYZ Co.'s license in this case. Additional Notes: If Bob is the RME of XYZ Co., he must be a "bona fide employee," as described in Answer
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? No: Even part-time employees must be covered. Yes: Part-time employees do not have to be covered. Yes: If the company has less than 10 employees, part-time employees do not have to be covered. Yes: If all of the full-time employees are covered, the part-time employee does not have to be.
Correct answer: No: Even part-time employees must be covered. Additional Notes: If you write a paycheck for an employee, that employee must be covered. It does not matter whether the employee is full- or part-time.
Of the following, which document is usually delivered first in a transaction involving a home improvement contract? 20-day preliminary notice three-day notice of right to cancel the contract Notice to Owner
Correct answer: Notice to Owner Additional Notes: Business and Professions Code Section 7018.5 requires that the "Notice to Owner" be given "prior to entering into a contract with an owner for work specified as home improvement or swimming pool construction."
If required safety devices are missing from tools, what should an employee do? Call Cal/OSHA. Notify the property owner, who is responsible for safety. Safety devices are the employee's responsibility. Notify the contractor, who is responsible for safety.
Correct answer: Notify the contractor, who is responsible for safety. Additional Notes: As the employer, the contractor is ultimately responsible for satety.
Which of the following statements about fixed expenses is most correct? Overhead is generally considered a fixed expense. Fixed expenses vary over time. Fixed expenses usually amount to less than 10% of total expenses. Direct labor is generally considered a fixed expense.
Correct answer: Overhead is generally considered a fixed expense. Additional Notes: Fixed means relatively constant over time.
Which of the following should be specified in a contract? Owner must pay for materials after they are installed. Owner must pay for materials after they are delivered. Owner must deliver the materials to the job site. Owner must pay after the job is completed
Correct answer: Owner must pay for materials after they are delivered. Additional Notes: The actual State exam question may refer to a time-and-materials contract.
When balancing the accounts receivable, which of the following would have no effect? Posting to the wrong accounts-receivable account. Crediting instead of debiting the accounts-receivable account. Debiting instead of crediting the accounts-receivable account. Posting a receivable to an accounts-payable account.
Correct answer: Posting to the wrong accounts-receivable account. Additional Notes: If you post to the wrong accounts-receivable account (e.g., Mrs. Jones instead of Mr. Smith), the total accounts receivable will still be the same, as will the general ledger. It is still an error, but it will not affect the total.
When you get an approved set of plans, what should you do first? Calculate the square footage. Call a material supplier. Read any notes from the building department. Schedule the job.
Correct answer: Read any notes from the building department. Additional Notes: Read the notes and then divide the job into its logical components before scheduling work.
A contractor bidding a job discovers that the specifications are incorrect. How should the contractor proceed? Submit the bid with change orders. Tell the owner to call in an architect. Tell the owner to get specifications that are correct. Refrain from submitting the bid.
Correct answer: Refrain from submitting the bid. Additional Notes: According to one of the references listed in the CSLB Study Guide, a contractor should bid "only jobs that have good specs."
If you find that work done by a previous contractor is in violation of the local building code, what should you do? The contractor may ignore the violation. Repair the violation immediately. Report the violation directly to the building department. Report the violation to the owner with an estimate for the needed repairs.
Correct answer: Report the violation to the owner with an estimate for the needed repairs. Additional Notes: As a licensed contractor, you may not ignore a code violation. Tell the owner the violation must be corrected and provide an estimate.
Sometimes contracts can prove to be too vague to interpret without disagreement between owner and contractor. Which of the following steps would best prevent such problems? Review the plans and specifications with the owner. Show the owner the critical path schedule. Include a payment schedule in the contract and review other details of the contract with the owner. Walk the job site with the owner.
Correct answer: Review the plans and specifications with the owner. Additional Notes: According to the references listed in the CSLB Study Guide, most disputes have to do with the plans and specifications.
What is the BEST way to make sure your bond and insurance are up to date? Choose insurance companies that will notify you by mail when your bond or insurance policy is due to expire. Review your bond and insurance policies before each bid is prepared. Review your bond and insurance policies every two months. Purchase only short-term bonds and insurance.
Correct answer: Review your bond and insurance policies before each bid is prepared. Additional Notes: If a bid is accepted, a contractor must start the job. The status of any bonds or insurance policy should be double checked before submitting a bid. Do not rely solely on your insurance company. Renewal notices are often mailed months in advance and are sometimes misplaced
If you are a subcontractor, there are three general steps in the mechanic's 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? List the attorney representing the subcontractor. Request prepayment for your work. Run credit checks on the owner and prime contractor. Serve a preliminary 20-day notice.
Correct answer: Serve a preliminary 20-day notice. Additional Notes: You can also file the preliminary notice with the County Recorder. The County Recorder will then notify you if a notice of completion or cessation is recorded against the property.
Which of the following is not by itself an acceptable form of documentation for filling out an I-9 form? certificate of United States citizenship green card U.S. passport Social Security card
Correct answer: Social Security card
If, during excavation, you unearth human remains or burial artifacts at a construction site, what should you do? Notify the owner of the property. Stop work immediately at that site and any other nearby area that may have remains. Stop work and place a warning ribbon three feet from the remains around the perimeter of the site. Stop work immediately at that site.
Correct answer: Stop work immediately at that site and any other nearby area that may have remains. Additional Notes: The Contractors License Law and Reference Book states, "Stop work immediately, at that site and any nearby area reasonably suspected to have remains, and contact the County Coroner. "
You have determined that the job you are working on involves asbestos. What should you do? File for an Asbestos Abatement certificate. Stop work immediately. Register with DOSH. Remove any asbestos and keep working.
Correct answer: Stop work immediately.
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? Stop work on the critical job and remedy the error. Tell the owner you will attend to the matter after you complete the critical work you are doing. Hire more workers to remedy the error. Ask the owner to sign a change order.
Correct answer: Tell the owner you will attend to the matter after you complete the critical work you are doing. Additional Notes: If the work needing correction does not pose a threat of injury, damage, or other harm, the contractor should finish the critical work-in-progress.
What is the purpose of the following statement in a contract? "THE AGENT IS LIABLE FOR FINAL PAYMENT." The owner is responsible for final payment. The agent is responsible for final payment. The owner and the agent are responsible for final payment. None are correct.
Correct answer: The agent is responsible for final payment. Additional Notes: One of the references listed in the CSLB Study Guide recommends a personal guarantee or similar clause in contracts with renters, lessees, or others who request work but do not own the property. Do not assume the owner will also be liable. For example, the owner can post and record a notice of nonresponsibility.
A contractor sues an owner for refusing to make final payment after the job was completed. The owner is demanding changes. What could the contractor have done to prevent the lawsuit? The contractor could have asked the workers to testify. The contractor could have walked the job with the owner and had the owner sign a job completion form. The contractor could have just walked the job with the owner. All are correct
Correct answer: The contractor could have walked the job with the owner and had the owner sign a job completion form. Additional Notes: A job completion form serves as a "punch list." It should include a statement from the owner that all work has been inspected and is satisfactory.
Your bid on a job was accepted, but you inadvertently left out a part of that job. What should you do? The contractor is responsible for the work. Write a change order and get it signed by the owner. Do the omitted portion of the job on a time-and-materials basis. Add the additional cost to the end of the job and say nothing about it.
Correct answer: The contractor is responsible for the work. Additional Notes: As a general rule, a contract is formed if the owner accepts the bid.
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? The contractor should check the box so that the owner-builder verification will be mailed to the owner. The contractor may check the box to avoid insurance charges. The contractor may not check the owner-builder box because the owner contracted for the improvement. The contractor may check the box because the contractor is the owner's employee.
Correct answer: The contractor may not check the owner-builder box because the owner contracted for the improvement. Additional Notes: Unless the contractor owns the property, the contractor is not an owner-builder. In this case, the contractor agreed to do a $900 improvement. The only time the owner-builder box is checked is if the property owner intends to personally do the work or hire employees to do the work
What precautions must the contractor take with hazardous substances? Each employee must sign a sheet stating that he or she understands the safety and health risks. The contractor must adopt a Code of Safe Practices that relates to work at each job site. You must hang a safety poster in an area near the time clock. You should make every employee wear a dust mask.
Correct answer: The contractor must adopt a Code of Safe Practices that relates to work at each job site. Additional Notes: The Code of Safe Practices should include a requirement that employees use personal protective clothing and equipment while working with hazardous substances. The contractor must also develop a written hazard communication program and provide training for employees.
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? Nothing: A contractor may fire any employee for any reason. The contractor must reinstate the employees and reimburse them for lost wages and benefits. Nothing: There is no appeals board for such cases. The contractor must reinstate the employees but is not required to reimburse them for lost wages and benefits.
Correct answer: The contractor must reinstate the employees and reimburse them for lost wages and benefits. Additional Notes: Each employee "shall be entitled to reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer"--Labor Code, Section 6310
An owner is having a difficult time making progress payments on time. What should a contractor do to protect herself? The contractor should meet with the owner to set up a new payment schedule. The contractor should ask the owner to open an escrow account. The contractor should hire an attorney. The contractor should file a mechanic's lien.
Correct answer: The contractor should ask the owner to open an escrow account. Additional Notes: Some contractors check the owner's credit before signing an agreement. If the owner's credit history is questionable, the contractor should insist on a third-party escrow account.
Which of the following is most important regarding safety at a job site? The contractor should show the workers how to use safety equipment. The contractor should require the workers to use safety equipment. The contractor should inspect the safety equipment every day. The contractor should properly store safety equipment when not in use.
Correct answer: The contractor should require the workers to use safety equipment. Additional Notes: All of the choices given are important, but "The contractor should require the workers to use safety equipment" is critical. Not all workers will use safety equipment unless it is required.
A contractor entered into a home improvement contract for more than $500 with Mrs. Swenson to remodel her kitchen and bathroom. The contract calls for a down payment before work is to begin. According to the Business and Professions Code, how much may the contractor accept from Mrs. Swenson as down payment for the work? The contractor may accept as much as Mr Swenson agrees to pay. The down payment is limited to $1000 or 10% of the total price, whichever is less. The contractor may require enough of a down payment to cover the total cost of materials, but not labor costs. Nothing: The contractor must wait until the work is completed to accept any payment.
Correct answer: The down payment is limited to $1000 or 10% of the total price, whichever is less. Additional Notes: Business and Professions Code Section 7159(d) limits the down payment for a home improvement contract to $1,000 or 10% of the contract price, whichever is less. For future reference, the down payment for a swimming pool contract is limited to $200 or 2% of the contract price, whichever is less.
An employee was injured because the contractor had overlooked a hazardous situation. Which of the following is a correct statement regarding responsibility for the injury? The employee is not guilty of contributory negligence because safety laws were violated by the employer. The employee and the employer are equally guilty of negligence because the employee accepted the job knowing it was unsafe. Everyone is at fault: The employee should not have inhaled. The employee's labor contract would not cover damages.
Correct answer: The employee is not guilty of contributory negligence because safety laws were violated by the employer. Additional Notes: Labor Code Section 2801 states, "It shall be conclusively presumed that such employee was not guilty of contributory negligence in any case where the violation of any law enacted for the safety of employees contributed to such employee's injury. . .. No contract, or regulation, shall exempt the employer from any provisions of this section."
If a newly hired employee does not have an SSN, what should be done? The employee must apply for an SSN. The employer must apply on behalf of the employee for an SSN. Call the police. If a W -2 is provided, an SSN is not needed.
Correct answer: The employee must apply for an SSN. Additional Notes: The employee can apply for an SSN by completing Form SS-5, "Application for a Social Security Card."
If an employee violates a safety rule and because of that another employee is injured, who is responsible? The employer is responsible. The employee who violated the safety rule. None are correct. The employee who violated the safety rule and the employer are both responsible.
Correct answer: The employer is responsible. Additional Notes: The employer is ultimately responsible for job-related injuries, even in cases where one employee causes injury to another employee.
If there is no collective bargaining agreement, which of the following is a correct statement regarding the payment of wages by an employer? The employer may pay wages at the end of the job if the employees agree. The employer may pay wages whenever the employer chooses. The employer may pay wages at the end of the job. The employer may pay wages twice a month.
Correct answer: The employer may pay wages twice a month. Additional Notes: If the employees are not covered by a collective bargaining agreement, Labor Code Section 204 allows the employer to pay wages weekly, biweekly (every two weeks), or semimonthly (twice a month).
How can a new employee learn about the safety record of a company? View a Cal/OSHA safety video tape. The employer must post a summary record of job-related injuries and illnesses once a year. Call the Cal/OSHA consultant services. None are correct
Correct answer: The employer must post a summary record of job-related injuries and illnesses once a year. Additional Notes: This answer assumes that the employer has 11 or more employees. An employee has a right to see and copy the logs and annual summaries of the previous five years, even if the employee is no longer employed by that firm.
Which of the following statements about home improvement laws is not correct? A subcontractor may give a salesperson a bonus. The homeowner may give the salesperson a bonus. A general contractor may give a salesperson a bonus. A subcontractor may not give the general contractor a bonus.
Correct answer: The homeowner may give the salesperson a bonus. Additional Notes: A home improvement salesperson may only accept a bonus from the contractor or subcontractor whom he or she represents. Also, contractors and subcontractors may not give one another bonuses for securing home improvement contracts.
How do you know if you are bidding correctly? You are getting all the jobs you bid on. The job cost is almost the same as the estimated cost. The job cost is substantially below the estimated cost. The job cost is substantially above the estimated cost.
Correct answer: The job cost is almost the same as the estimated cost. Additional Notes: By definition, "bidding correctly" would mean that you did not leave any items out of the bid and the estimated costs were essentially the same as the actual job costs.
A contractor is offering a job that will last at least six months but could continue longer. What should the contractor tell people when interviewing for the job? The job is part-time. The job is permanent. The job is temporary and may become permanent. The job is temporary.
Correct answer: The job is temporary. Additional Notes: The Employer's Legal Handbook states, "During the hiring process, don't give assurances that you may not be able to honor and that may give the applicant a false sense of security."
Which of the following statements about mechanics' liens is correct? The prime contractor is responsible for the debt stated in the lien. A supplier must deliver material to the job site in order for a mechanics' lien to be valid. The owner is responsible for the debt stated in the lien. A supplier does not have a right to a mechanics' lien.
Correct answer: The owner is responsible for the debt stated in the lien. Additional Notes: Answer "A supplier must deliver material to the job site in order for a mechanics' lien to be valid" is incorrect because the materials must actually be used in the construction of the building in order for the supplier's lien to be valid. Whether the supplier or a contractor delivers materials to the job site is irrelevant.
What possible reason would an owner have for requiring an unconditional lien release from a subcontractor? A lien release provides for rights of cancellation. The lien release protects the prime contractor. A lien release informs the owner of progress on the job. The owner's property covered by the release many not be liened.
Correct answer: The owner's property covered by the release many not be liened. Additional Notes: Civil Code Section 3262 requires that certain phrases be included in unconditional lien releases. Among those phrases is: "THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL RELEASE FORM."
Who is responsible for establishing that a subcontractor is duly licensed? The owner is responsible. A subcontractor is not required to prove that he or she is licensed. A subcontractor may work up to 10 days consecutively without being licensed. The prime contractor is responsible.
Correct answer: The prime contractor is responsible. Additional Notes: The prime is required to ask the sub to show proof of licensure. The CSLB interprets this responsibility in a strict sense. In their own words, "When working with a contractor you don't know, ask to see his or her current license renewal card. Also make sure the subcontractor includes his or her license number on the subcontract or bid form. " You can also check to see if the sub's license has been suspended or revoked by calling the CSLB. A contractor is usually considered to be the employer of any unlicensed subcontractor and is therefore liable for payroll taxes.
How should the prime contractor determine whether a subcontractor has workers' compensation insurance? The prime contractor should check with the Registrar's office to see if the sub is insured. Subcontractors do not need workers' compensation insurance. The prime contractor should periodically call the sub's insurance agent to check on the sub's policies. The prime contractor should ask to see the expiration date on the sub's certificate of insurance.
Correct answer: The prime contractor should ask to see the expiration date on the sub's certificate of insurance. Additional Notes: The prime must determine, with "due diligence," when the sub's policy is in force by inspecting the sub's certificate of insurance. The prime must check the expiration date of the policy as well as the date the certificate was issued. (An old certificate may no longer be valid: The policy may have lapsed.)
A prime contractor decides to sub out the electrical work. How would the prime determine what price to add for the electrical work? The prime calls up the electrical material supplier and calculates the bid amount. The prime gets a firm bid from the subcontractor. The prime gets an estimate from the subcontractor. Everybody charges a flat rate.
Correct answer: The prime gets a firm bid from the subcontractor. Additional Notes: The prime contractor should require subcontractors to submit actual bids--not estimates.
What does it mean when a subcontractor signs a waiver and release form on a public works project? The subcontractor gives up the right to lien the construction funds. The subcontractor gives up the right to lien the real property. The subcontractor is no longer responsible for correcting defective work. The subcontractor waives the right to lien the real property or the construction funds.
Correct answer: The subcontractor gives up the right to lien the construction funds. Additional Notes: Public property is not subject to mechanic's liens. But a subcontractor can place a stop notice hold on construction funds.
A prime contractor entered into a construction contract with a subcontractor. An employee of the subcontractor was injured, but unfortunately the subcontractor had not secured workers' compensation coverage. Which of the following statements best describes the situation, except in cases of fraud? The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. The prime contractor is guilty, but the subcontractor is not responsible. The subcontractor is guilty, but the prime contractor is not responsible. Neither the prime contractor nor the subcontractor are responsible.
Correct answer: The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. Additional Notes: Subcontractors must provide workers' compensation benefits for their employees. If the subcontractor is not insured for workers' compensation and is otherwise unable to provide benefits, the prime contractor is usually held responsible. Prime contractors should always require a certificate of insurance from subcontractors.
There is a near-miss safety situation on a job. What steps should the employer take? The unsafe situation must be investigated, but a written report is not required. Report the near-miss to DOSH. Report the near-miss to the workers' compensation insurance carrier. The unsafe situation must be investigated, and the investigation must include a written report.
Correct answer: The unsafe situation must be investigated, and the investigation must include a written report. Additional Notes: Occupational illnesses, accidents, and near-misses must be investigated. The standard investigatory procedure must include a written report.
As part of the safety training process, contractors' supervisors are urged to meet with management on a regular basis. How often must these meetings be held? Meetings must be held weekly. They are required to meet periodically. When there is an accident at the job site. When a change order is executed and an accident happens.
Correct answer: They are required to meet periodically. Additional Notes: The recommended frequency is at least once a month.
A licensed contractor wants to work with a person who is not licensed. Of the following, which is a legal alternative? They could work as partners if the licensed contractor signs all of the contracts. They could form a corporation and obtain a corporate contractor's license. They should apply for a sole proprietorship contractor's license. They could obtain a joint venture contractor's license.
Correct answer: They could form a corporation and obtain a corporate contractor's license. Additional Notes: They cannot work as partners without first obtaining a partnership license. A joint venture license cannot be issued unless all members are actively licensed.
What information must employees have to pass a job evaluation? How to perform CPR. The results of a health examination. How to safely use tools on the job site. They must have a detailed job description.
Correct answer: They must have a detailed job description. Additional Notes: They have to describe the job to be evaluated.
If retention is withheld until substantial completion of the entire job, the subs who worked on the early stages of the project can be put at a financial disadvantage. What is the best way to remedy this situation? Tie the release of proportional retentions to the completion of the sub's work rather than the entire job. Pay the subs when they finish, no matter what. None are correct Contact the owner immediately.
Correct answer: Tie the release of proportional retentions to the completion of the sub's work rather than the entire job.
Why should a contractor visit the work site frequently? To keep the subcontractors informed of the job's progress and to check on what materials must be ordered for the next phase of construction. To know when to schedule final payment. To know the approximate final cost. To know when to schedule float time.
Correct answer: To keep the subcontractors informed of the job's progress and to check on what materials must be ordered for the next phase of construction.
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? Through due-process procedures, DOSH will identify the employee, but the employee may not be fired. 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. Through due-process procedures, DOSH will identify the employee, but no retaliation may be directed at the employee. DOSH will release the employee's name for a fee, and the contractor may deal with the employee in any way the contractor chooses.
Correct answer: 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. Additional Notes: DOSH will not reveal the identity of an employee who makes a complaint, unless the employee asks that his or her name be disclosed. Labor Code Section 6310(a) prohibits an employer from discharging or otherwise retaliating against the employee.
Which of the following best describes the difference between "claims-made" and "occurrence" types of liability insurance? An occurrence policy is intended to cover a particular one-time accident. Unlike occurrence insurance, a claims-made policy covers claims made after the policy expires. Unlike claims-made coverage, occurrence insurance covers claims made after the policy expires. A claims-made policy is intended to cover a particular one-time accident.
Correct answer: Unlike claims-made coverage, occurrence insurance covers claims made after the policy expires. Additional Notes: An occurrence policy provides coverage for injuries or damages that occur during the policy period, even if a claim is made after the policy expires. Occurrence liability policies are more expensive, but they do provide better protection. A claims-made policy covers injuries and damages only if a claim is made during the policy period. You are responsible for any claims made after the claims-made policy expires.
If a contractor has temporary cash-flow problems, what is a good way to get through the crisis? Delay paying the employees. Hold off paying the materials bill. Use funds from a pre-established line of credit. Apply for a construction loan.
Correct answer: Use funds from a pre-established line of credit. Additional Notes: A line of credit allows the contractor to obtain preapproved short-term loans to cover fluctuations in cash and other current assets.
What federal forms are given to a newly hired employee? W-4 and DE-1 W-4 and I-9 I-9 and W-3 1099-R and FTD-8109
Correct answer: W-4 and I-9 Additional Notes: You verify that a newly hired employee is legally eligible to work in the United States with Form I-9 (Employment Eligibility Verification Form)--available from the INS, not IRS. Each new employee must also be asked to complete Form W -4 (Employee's Withholding Allowance Certificate).
Of the following, which is the best way to determine if more materials must be ordered? Compare material lists for similar jobs. Compare the present inventory to the inventory for last year. Ask a supervisor. Walk the job.
Correct answer: Walk the job. Additional Notes: The contractor and supervisor should walk the job.
After you have read the plans and specifications, what is the next important step in writing a bid? Walk the job. Talk to the crew leader about labor. Call about materials, price, and availability. Talk to and select subs.
Correct answer: Walk the job. Additional Notes: The references listed in the CSLB Study Guide recommend that you review the plans and specifications and then do an on-site inspection ("walk the job"). This is especially true for remodeling jobs.
On a job application, John states he has experience soldering pipe. What is the best way to determine his soldering ability? Talk to his last employer. Rely on the job application. Watch John solder pipe. Review photographs of John's last soldering job.
Correct answer: Watch John solder pipe. Additional Notes: The references listed in the CSLB Study Guide recommend that the employer actually observe the applicant doing a task. As one text states, "Note how the applicant handles the tools, approaches the task, finishes the work and how long it takes."
When should an employer provide information on safety procedures? None are correct Once a month to a supervisor. When it is updated by Cal/OSHA. When a new employee is hired.
Correct answer: When a new employee is hired. Additional Notes: New employees must be told safety procedures (because they may not know them), but make sure the State doesn't offer "all are correct" as a choice. Periodic (but not necessarily monthly) meetings with supervisors are required, and employers should be aware of any changes or updates Cal/OSHA makes.
When does it make the most sense for a contractor to finance a job? When he will not get the job otherwise When it is an emergency situation, and the owner cannot get the money soon enough. When the owner will go to a competitor otherwise When the owner has previous bankruptcies and cannot get credit.
Correct answer: When it is an emergency situation, and the owner cannot get the money soon enough.
When is a worker considered an employee rather than an independent contractor? When the worker can make a profit or loss on the work. When the employer has the right to tell the worker to do certain work. When the employer has direct control over the work being performed. When the worker doesn't set his own hours.
Correct answer: When the employer has direct control over the work being performed. Additional Notes: The IRS uses 20 different criteria to determine if a worker is an employee or independent contractor-- including degree of supervision, whether employees have their own tools, etc. The more the direction, the greater the chance of being ruled an employee. In fact, the IRS usually assumes that the worker is an employee, and that assumption must be disproved to establish status as an independent contractor.
When can a contractor accept a job where the owner does not have a pre-approved loan? When the owner seems kind and has an honest reputation. When the owner has bad credit. When the owner has an amount in the bank equal to the contract cost. When there is an emergency situation and the owner has a high income and good credit.
Correct answer: When there is an emergency situation and the owner has a high income and good credit.
For which of the following injuries does Cal/OSHA require employers to make and keep records? Worker is knocked unconscious but returns to work after resting for one hour. Worker suffers a burn that requires a one-time visit to the doctor. All are correct Worker develops a chronic allergy after repeated exposure to fiberglass insulation.
Correct answer: Worker is knocked unconscious but returns to work after resting for one hour. Additional Notes: Any injury involving a loss of consciousness must be recorded by the employer. The employer is not required to record minor injuries such as a bum that can be treated by first aid or by a one-time visit to a physician. The physician would be responsible for diagnosing, recording, and reporting an allergic reaction to the employer's workers' compensation carrier.
After a job is completed, the owner decides to have additional work done. How should the contractor proceed? Get the owner to sign a change order. Make an oral agreement with the owner. Do the additional work for free. Write a new contract and ask the owner to sign it.
Correct answer: Write a new contract and ask the owner to sign it. Additional Notes: It is best to collect the balance owed for the original contract, and then prepare a new contract for the additional work.
You are the qualifier for an active contractor's license. How do you inactivate the license? Wait to receive the license renewal application and then do not pay the renewal fee. Write to the CSLB, requesting that the license be made inactive. Cancel the contractor's license bond. Nothing: The license will automatically become inactive when the license term expires.
Correct answer: Write to the CSLB, requesting that the license be made inactive. Additional Notes: Call or write the CSLB. They will send you the "Application to Inactivate State Contractor's License." You must complete and return the application with your current pocket license. The CSLB will send you a pocket license marked "Inactive."
Is it legal for a contractor to pay employees in cash? Yes, if the contractor provides each employee with a wage deduction statement semi-monthly or at the time of each wage payment. Yes, if the contractor provides each employee with Form W-2 at the end of the year. No, unless the contractor obtains a receipt from each employee showing the amount of gross wages received. No, because an employee's wages must be paid by a check with a wage deduction statement attached.
Correct answer: Yes, if the contractor provides each employee with a wage deduction statement semi-monthly or at the time of each wage payment. Additional Notes: Labor Code Section 226 states, "The deductions made from cash payments of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement, or a record of the deductions, shall be kept on file by the employer for at least three years ...".
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? Yes. A successor clause in a collective bargaining agreement is binding on a successor for up to three years. No. The contractor never personally consented to the collective bargaining agreement. No. Successor clauses in collective bargaining agreements are illegal. No. A successor clause in a collective bargaining agreement is not binding on a successor for more than a year.
Correct answer: Yes. A successor clause in a collective bargaining agreement is binding on a successor for up to three years. Additional Notes: Collective bargaining agreements often include clauses extending their terms to successors (e.g., a person who buys the business after the collective bargaining agreement is signed by the original owner). However, Labor Code Section 1127 limits successor clauses to three years.
A general contractor has obtained bids from several subcontractors for a private project. He notices that one bid is substantially lower than the rest. Is it ethical and a good business practice for this contractor to inform the subcontractor that the bid is substantially lower than the bids of the other subcontractors? Yes. If the contractor has reason to believe that the subcontractor has made an error in preparing his bid, the contractor should notify the subcontractor of the apparent error, but the contractor may not disclose the amounts of the other bids. No. It would be unethical for the contractor to inform any subcontractor that their bid is substantially lower than the other bids, even if the contractor believes that the subcontractor has made an error. None are correct. Yes. If the contractor believes that the subcontractor has made an error in compiling his bid, the contractor should disclose the amounts of the other subcontractors' bids to the subcontractor, so the subcontractor can determine the extent of his error.
Correct answer: Yes. If the contractor has reason to believe that the subcontractor has made an error in preparing his bid, the contractor should notify the subcontractor of the apparent error, but the contractor may not disclose the amounts of the other bids. Additional Notes: If a subcontractor's bid is so low that the prime contractor has reason to believe the sub made a mistake, the prime should ask the sub to review the sub-bid. Ethics aside, courts have generally held subcontractors to their bids even in cases where the sub made a mistake in computing the sub-bid price. The courts recognize that a prime contractor relies on sub-bids when preparing the prime bid. However, the courts have also recognized that the prime contractor's reliance on sub-bids must be reasonable. Consequently, a prime contractor should question unusually low sub-bids for both ethical and legal reasons. A subcontractor may successfully argue in court that the prime should have concluded, after comparing the sub's bid with other sub-bids, that the sub made a mistake--in which case the sub could be excused from performing the subcontract.
A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and Mr. Jones sign a contract that includes a three-day cancellation form. After the contractor leaves, Mr. Jones decides not to have the work done. Instead of using the cancellation form, Mr. Jones sends the contractor a letter by first-class mail stating that he is canceling the contract. Is Mr. Jones' cancellation effective? No. Mr. Jones did not sign and return the cancellation form. No. Mr. Jones did not return the contract with the letter. Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract No. However, the letter would have canceled the contract had it been sent by certified or registered mail.
Correct answer: Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract Additional Notes: Civil Code Section 1689.6(e) states, "Notice of cancellation given by the buyer need not take the particular form as provided with the contract or offer to purchase and, however expressed, is effective if it indicates the intention of the buyer not to be bound by the home contract or offer. "
Your workers' comp insurance policy lapsed two weeks ago. You mailed the check yesterday, and today one of your employees is injured on the job. Which of the following statements is true? You are not covered because the injury occurred after the two-week grace period. You are covered because you mailed a check. You are covered because the injury occurred within 30 days of the lapse of coverage. You are not covered because the policy lapsed.
Correct answer: You are not covered because the policy lapsed. Additional Notes: The key word in this question is "lapsed." The definition commonly found in insurance manuals is: "LAPSE - This occurs when the premium on a policy is not paid, and the policy is beyond the grace period. No benefits would be paid."
Of the following, which is a correct statement regarding a schedule of payments in an original bid? The material must be paid for as it is installed. The schedule must include specific dates and dollar amounts. The second payment is not due until after 60% of the work is completed. You are not required to include a schedule of payments in the original bid.
Correct answer: You are not required to include a schedule of payments in the original bid. Additional Notes: An original bid, whether oral or written, need not include a payment schedule. However, the home improvement contract must include a schedule that shows the amount of each payment in dollars and cents.
Some counties have an additional sales tax added to the base rate. Which of the following is a correct statement regarding this additional tax? You do not have to pay this additional tax if your home office is in another county. This additional tax does not apply to contractors. You must pay the additional tax in the county where the materials were purchased. You may pay the additional tax charged in your county if the rate is lower than the county where the materials were purchased.
Correct answer: You must pay the additional tax in the county where the materials were purchased. Additional Notes: As it applies to contractors, the Sales and Use Tax Law is often very confusing. Before starting your business, obtain a copy of Pamphlet No.9, "Tax Tips for Construction and Building Contractors," from the Board of Equalization.
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? Your net income will be greater than it should be in the second year. It is illegal to omit depreciation. Your net income will be less than it should be in the second year. Your net income will be the same for both years.
Correct answer: Your net income will be greater than it should be in the second year. Additional Notes: Depreciation is an expense. If you omit depreciation, your net income will be overstated.
A time card includes the day and hours the person worked, as well as: the employees date of birth the hourly wage the location of the job a description of the work
Correct answer: a description of the work Additional Notes: A time card will also usually include the employees name, the pay period, and the job or project number.
What is the most common reason that a license is suspended? a lapse of the contractor's bond one serious accident employee complaints two serious accidents
Correct answer: a lapse of the contractor's bond Additional Notes: The CSLB automatically suspends a license if the license bond expires. There is no pre- suspension warning, as in the case of a lapsed worker's compensation policy.
A client requests a bid package from a contractor. The package should include: a list of references for the contractor a certificate from the Building Standards Safety Department a copy of the contractors license a list of all subcontractors
Correct answer: a list of all subcontractors
An employer would issue a 1099 to: an employee who is not currently working an employee who is currently working for the employer a nonemployee who was paid at least $600 for services during the year any nonemployee regardless of the amount paid for services
Correct answer: a nonemployee who was paid at least $600 for services during the year Additional Notes: Form 1099-MISC, "Statement for Recipients of Miscellaneous Income", is for independent contractors. There is an exception for corporations. If one of your subcontractors is incorporated, you are not required to issue them a 1099.
Which of the following is required to be registered as a home improvement salesperson? a salesperson working in a shopping mall a salesperson working on the telephone a salesperson working at the contractor's showroom all are correct
Correct answer: a salesperson working on the telephone Additional Notes: A salesperson whose negotiations are initiated by the buyer at, or with, a business that operates from a fixed location where good or services are offered for sale is not required to be registered. Shopping malls and showrooms are both fixed locations offering goods for sale, although it should be noted that the salesperson must be connected with one of the stores at the shopping mall, not merely meeting clients there.
An "aging" report is: used to determine interest on a loan a way of keeping track of overdue accounts a method of tracking inventory a type of depreciation schedule
Correct answer: a way of keeping track of overdue accounts Additional Notes: The report lists the age of each client's account in days (0-30 days, 31-60 days, 61-90 days, etc.).
The required Injury and Illness Prevention Program (IIPP) takes the form of: a written plan that includes procedures and that is put into practice and documented a written plan an oral or written plan approved by the contractor and an employee representative oral safety talks supplemented by a written plan
Correct answer: a written plan that includes procedures and that is put into practice and documented Additional Notes: It is not sufficient merely to have a written plan, even though it has detailed procedures. It must be put into effect (e.g., via inspections and safety meetings), documented in writing, and kept up-to-date.
Who is best prepared to submit a financial statement to a bank to obtain a loan? accountant owner bookkeeper contractor
Correct answer: accountant Additional Notes: Accountants are best qualified to prepare and submit financial statements, especially audited statements.
A bookkeeper for a construction company sends out bills once a month. Where should the company file its copy of each bill? operating profit accounts payable notes payable accounts receivable
Correct answer: accounts receivable
On a time-and-materials job, you should: add profit and overhead to labor and materials add profit and overhead to materials only add profit and overhead to labor only not charge for profit and overhead
Correct answer: add profit and overhead to labor and materials Additional Notes: The references listed in the CSLB Study Guide recommend that you add a percentage of the job total. If your bill lists separate charges for labor, materials, and subcontractors, an alternative would be to mark up each of these charges to cover overhead and profit.
When would an employee be required to complete a new IRS Form W-4 ? after a change in marital status after a change in address and phone number after a change in age only if fewer than 10 exemptions are claimed
Correct answer: after a change in marital status Additional Notes: A new W-4 must be completed whenever the employee's marital status changes or there is a change in the number of withholding allowances.
Where should the following statement be placed in a written contract?"THE CONTRACTOR IS NOT RESPONSIBLE FOR DELAYS CAUSED BY WEATHER, EARTHQUAKES, FLOODS, OR OTHER ACTS OF GOD." after the signatures before the job description after the approximate work period after the change order clause
Correct answer: after the approximate work period Additional Notes: The statement is a disclaimer relating to the completion date mentioned in a contract.
Where would a contractor go to verify that building permits were issued for all construction work done on a house? County Recorder's office State Department of Housing OSHA agency that granted initial permit
Correct answer: agency that granted initial permit Additional Notes: The local building department would have copies of permits. If the permits were issued several years ago, the records will probably be on microfilm.
If a client continues to request change orders, you should: collect change order costs as you go charge administrative fees all are correct not proceed until your client has signed each change order
Correct answer: all are correct Additional Notes: According to one of the references in the CSLB study guide, you should collect payment for change orders as you go, rather than tacking them on to the last payment. Always wait for your client to sign change orders, because unsigned orders aren't admissible in court.
When should safety clothing be worn on a job site? all are correct when pouring concrete when you arrive at the job site when operating machinery
Correct answer: all are correct Additional Notes: The type of clothing required for a given task may include a hardhat, goggles, gloves, aprons, foot protection and so on.
What is the penalty for obtaining and providing to another any part of the exams administered by the Contractors' State License Board? $500 fine all are correct misdemeanor conviction the exam will be forfeited, and the applicant may not reapply for one year
Correct answer: all are correct Additional Notes: This is usually the last question on the State exam. The actual State exam question may be worded a little differently, but the idea is still the same: You may not remove State exam materials from the test room for any reason. Also, you may not photocopy, photograph, or reproduce the State exam by any other means. However, you do have the right--the right of Free Speech--to discuss the exam with others after taking it.
Good accounting records are necessary for: obtaining financing maintaining financial statements all are correct effective management
Correct answer: all are correct Additional Notes: Without accurate bookkeeping and accounting procedures and records, the balance sheets and income statements would not be considered reliable.
"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: all prime contracts, subcontracts, and advertising all prime contracts and subcontracts all prime contracts only contracts for jobs over $500
Correct answer: all prime contracts Additional Notes: Section 7030 of the Business and Professions Code requires that this statement be included on prime contracts.
Which of the following components of a bid would be considered nonproductive? allowance for breakfast and lunch at a remote jobsite equipment purchased for job travel time surface preparation for painting
Correct answer: allowance for breakfast and lunch at a remote jobsite Additional Notes: This is an odd question, but if a contractor will need to provide food to workers, it will be a cost that will have to be accounted for in the bid, but it is not a productive part of the job.
Which of the following is the most important factor with respect to a schedule of payments? amount date phase keeping lender informed of job progress
Correct answer: amount
Which of the following statements is true? a 17 year old can legally work on a roof a 17 year old can legally drive a forklift an 18 year old can legally drive a vehicle as part of his normal job duties a 15 year old can legally work in a tunnel
Correct answer: an 18 year old can legally drive a vehicle as part of his normal job duties
When a subcontractor does work on a public works contract, the public agency considers the subcontractor to be: a subcontractor of the prime contractor an employee of the agency a subcontractor of the agency an employee of the prime contractor
Correct answer: an employee of the prime contractor
Which type of job-related injury requires the employer to make a written report? an injury requiring medical attention beyond first aid an injury requiring just first aid all are correct if the employee is required to return to work after the injury
Correct answer: an injury requiring medical attention beyond first aid Additional Notes: Labor Code Section 5401 requires a complete written report for injury that "results in lost time beyond the date of the injury or which results in medical treatment beyond first aid."
Of the following, which may not be determined from a completed job application? applicant's schooling applicant's former employers applicant's work experience applicant's honesty and integrity
Correct answer: applicant's honesty and integrity Additional Notes: A standard job application would include information about previous employers, work experience, and education. Opinions about a prospective employee's honesty or integrity would have to be obtained by calling the individuals listed as references.
Who is best qualified to submit plans and specifications? architect engineer owner builder
Correct answer: architect Additional Notes: Of the those listed, the architect would be best qualified to prepare and submit plans and specifications.
Of the following, who can benefit from a mechanics' lien? manufacturers of construction matetials and subcontractors architects and subcontractors manufacturers of construction materials and clients clients and subcontractors
Correct answer: architects and subcontractors Additional Notes: Unlike material suppliers (retailers), manufacturers are not entitled to file mechanics' liens.
How many times may the qualifying individual take the State license exam before the application is voided? as many times as necessary within 18 months once three times twice
Correct answer: as many times as necessary within 18 months
How many times may you take the contractor's license exam before your original application is voided? an unlimited number of times three times if you conform to scheduling five times as many times as necessary within 18 months
Correct answer: as many times as necessary within 18 months
A balance sheet shows: revenues and expenses at a certain point in time assets and liabilities over an extended period of time revenues and expenses over an extended period of time assets and liabilities at a certain point in time
Correct answer: assets and liabilities at a certain point in time Additional Notes: A balance sheet also shows the owner's or stockholders' equity
As part of the safety training process, contractors' supervisors are required to conduct 'toolbox' or 'tailgate' safety meetings. How often must these meetings be held? daily at least once every ten working days at least once a month at least once a quarter
Correct answer: at least once every ten working days Additional Notes: The safety meetings referred to are those between supervisors and employees. A different and optional recommendation is that supervisors and management meet at least once a month.
Where must the supplier's MSDS sheets be kept? at the office at the job site they should be discarded in a file cabinet
Correct answer: at the job site Additional Notes: "MSDS" is an abbreviation for the Material Safety Data Sheets. They provide information about hazardous substances.
Which of the following statements is used to determine the "acid test"? income statement balance sheet cash-flow statement annual income tax return
Correct answer: balance sheet Additional Notes: The "acid test" refers to the quick ratio, which is the ratio of quick assets (current assets minus inventories) to current liabilities.
A(n) ________ represents a company's financial position on a specified date. profit plan balance sheet income statement cash flow statement
Correct answer: balance sheet Additional Notes: The date is generally at the end of a month, quarter, or year.
On a small job, what is the best way to make an efficient schedule? critical path method (CPM) bar chart talk to suppliers to arrange around their schedules talk to subs to arrange around their schedules
Correct answer: bar chart
Social security tax for a self-employed contractor is: based on the rate set for the self-employed for the year in which the tax is paid zero because self-employed contractors are not required to pay social security tax half the employees' rate the same as the employees' rate
Correct answer: based on the rate set for the self-employed for the year in which the tax is paid Additional Notes: The social security tax rate for self-employed contractors is reported annually on Schedule SE (Computation of Social Security Self-Employment Tax), which is attached to Form 1040 The rate for the self-employed is different from the employees' rate. The exact rates for the self-employed or employees are based on the percentages established for each tax year.
A general contractor with a general building license wants to form a corporation with two specialty contractors - one has a C-10 license and the other a C-36. The new corporation should: be licensed in the general building classification only. be licensed in all three license classifications. be licensed in the C-10 and C-36 classifications only. obtain a special license from the CSLB.
Correct answer: be licensed in all three license classifications. Additional Notes: If the new corporation is licensed in all three classifications, it can function as a prime contractor ("B" = General Building) or subcontractor ("C-10" = Electrical, "C-36" = Plumbing).
What is the best time to talk to a client about liens and stop notices? 30 days after the job starts 10 days after the job starts 20 days after the job starts before the job starts
Correct answer: before the job starts
If a building permit is required, when does the law permit a building inspector to enter and inspect a residence? anytime--day or night within 24 hours after the building department is notified that construction has been completed 10 days after completion of all work between 8 am and 6 pm unless the owner has given permission to inspect at some other time
Correct answer: between 8 am and 6 pm unless the owner has given permission to inspect at some other time Additional Notes: State Housing Law Section 17972 prohibits a building inspector from entering a residence before 8 am or after 6 pm "without the consent of the owner or the occupants."
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? bid bond performance bond completion bond contract bond
Correct answer: bid bond
Which financial ratio measures liquidity? acid-test ratio (quick ratio) current ratio both are correct neither
Correct answer: both are correct Additional Notes: The current ratio compares current assets to current liabilities. The acid-test ratio (quickratio) is based on "quick" assets (current assets less inventories). Both ratios are a measure of liquidity.
Who would be held responsible if a contractor completes a project according to plans and later discovers that there is a building code violation? contractor both the contractor and the architect architect owner
Correct answer: both the contractor and the architect Additional Notes: If a contractor notices a discrepancy between the plans and code, he or she should notify the architect and/or engineer--whoever signed off on the plans as a representative of the owner. If neither noticed the violation and construction proceeds, both the architect and contractor can be held liable. The liability of the architect certainly does not end when the plans are signed, nor is the contractor exempt from liability once the plans are read and construction begins. But if the contractor had noticed an error in plans and had reported it to the architect before construction began, the contractor bears no liability for such errors.
If a contractor enters into a contract with an unlicensed person, who is in violation of the law? both the contractor and the unlicensed person the contractor only the unlicensed person if he didn't notify the contractor the unlicensed person
Correct answer: both the contractor and the unlicensed person
What should construction employees wear when working at night? dark-colored jackets bright-colored vests light sticks on strings around their necks night vision goggles
Correct answer: bright-colored vests Additional Notes: For nighttime work, employees should wear bright-colored, retroreflective vests or jackets.
A contractor keeps change orders on file: for tax purposes by UBC requirement to get paid when the job is over by law
Correct answer: by law Additional Notes: According to Business and Professions Code Section 7111(a), a contractor should "keep records showing all contracts, documents, records, receipts, and disbursements by a licensee of all of his or her transactions as a contractor" for at least 5 years.
Which of the following would qualify a person as an "independent contractor"? doesn't punch a time clock can make a profit or loss on work works at home only works on small Jobs
Correct answer: can make a profit or loss on work Additional Notes: IRS Publication 15-A lists various criteria that determine whether a person is an independent contractor as opposed to an employee. One of the criteria listed is: "The extent to which the worker can realize a profit or loss. An independent contractor can make a profit or loss."
Which would not have to be reported to DOSH immediately or within 24 hours? employee falls off forklift and suffers a severe back injury drunken crane operator hits a high-voltage power line death from a three-story fall car accident in which an employee steps onto a public road, gets hit by a car, and suffers a concussion
Correct answer: car accident in which an employee steps onto a public road, gets hit by a car, and suffers a concussion Additional Notes: Deaths and accidents resulting in serious injuries must be reported to DOSH. Accidents involving operation of heavy equipment adjacent to high-voltage wires must also be reported to DOSH. However, you are not required to report accidents occurring on public streets or highways.
A(n) ________ is used to analyze the income and outflow of cash during a period of time. balance sheet cash flow statement income statement profit plan
Correct answer: cash flow statement Additional Notes: The cash flow statement shows where the cash came from and what it was used for.
What is a relatively simple way to figure overhead and profit (OH&P) for a bid? use the industry standard check the profit and loss (P&L) statements for jobs of similar size average the OH&P on jobs for the previous month review OH&P and contracts for the past year
Correct answer: check the profit and loss (P&L) statements for jobs of similar size
Which of the following jobs does not require a contractor's license? installing a French door building a six-foot high fence painting the interior or exterior of a building construction of an oil derrick
Correct answer: construction of an oil derrick Additional Notes: "Oil and Gas Operations," including construction, are exempt from CSLB licensing requirements.
Which two types of loans would a contractor most likely see? construction or permanent bank or savings & loan ("S&L") fixed or variable government or private
Correct answer: construction or permanent Additional Notes: According to one of the references in the CSLB Study Guide, except for small jobs, financing for construction projects is usually in the form of construction and permanent loans from banks. S&L's rarely offer construction loans.
A contractor finds a 6" discrepancy on a set of plans. The contractor should: ignore the discrepancy because it is minor make the correction contact the owner contact the architect or the building designer
Correct answer: contact the architect or the building designer Additional Notes: The contractor should first contact the person who prepared the plans.
Which of the following bonds guarantees both job completion and payment of subcontractors and suppliers? performance bond payment bond bid bond contract bond
Correct answer: contract bond Additional Notes: A contract bond is a combination of performance and payment bonds.
Which type of bond insures that the contractor will pay all labor and material bills and fulfill the terms of the contract? contract bond performance bond bid bond materials bond
Correct answer: contract bond Additional Notes: A contract bond is defined as a bond that guarantees "both job completion and payment of all labor and materials." The performance bond guarantees job completion according to plans and specs but does not guarantee payment of bills.
Who is responsible for having the job ready for the inspector? foreman owner architect contractor
Correct answer: contractor
Who is responsible that safety equipment is actually put to use on the jobsite? foreperson lead worker contractor a specially designated employee
Correct answer: contractor Additional Notes: As should be obvious by now, the contractor/employer is ultimately responsible for safety.
If a contractor violates the safety code and an employee is injured, who will be held responsible? contractor architect owner employee
Correct answer: contractor Additional Notes: Diversion is a cause for disciplinary action (Business and Professions Code Sec. 7108).
Who is responsible for checking the site before the building inspector arrives? owner contractor foreperson architect
Correct answer: contractor Additional Notes: In most contracts, contractors must certify that they have visited the job site and familiarized themselves with the local conditions under which construction will take place. Accordingly, contractors would be expected to incorporate into their bids the contingencies necessary to complete the job.
Who is in charge of safety at a job site? foreperson contractor labor specialist most experienced worker
Correct answer: contractor Additional Notes: More generally, the employer is responsible for maintaining a place of employment that is safe and healthful for all employees.
Who is responsible for keeping track of change orders? owner contractor foreperson supervisor
Correct answer: contractor Additional Notes: The contractor should keep the original copies of change orders. In fact, Section 7111 of the Business & Professions Code requires the contractor to keep all contracts, change orders, receipts, etc., for at least five years after the project is completed.
Once a budget is finalized, the: contractor should do the best possible job of staying within the budget budget should be referred to only if the business has cash flow problems budget should be revised each month contractor should stick to the budget no matter what happens
Correct answer: contractor should do the best possible job of staying within the budget Additional Notes: A budget serves as a goal for a business. Staying within the budget helps increase profitability.
Which is the most correct statement as to what must be included in every home improvement contract? Notice of Right to Cancel contractor's license number Truth in Lending Notice name of the project
Correct answer: contractor's license number Additional Notes: Every home improvement contract must include the name, address, and license number of the contractor. A Notice of Right to Cancel is only required if the home improvement contract also meets the definition of a home solicitation contract.
What is the relationship between a prime contractor and a subcontractor? no relationship employer-employee parallel contractual
Correct answer: contractual Additional Notes: The subcontractor is an independent contractor. The relationship to the prime is based on the contract between the prime and subcontractor.
When purchasing insurance, what is the best way to choose among different companies? location of the company cost and coverage referral word-of-mouth
Correct answer: cost and coverage Additional Notes: Comparison shopping for insurance is based primarily on cost and coverage. Other factors include the insurer's industry rating (e.g., A.M. Best "A-Rated"), the number of years in business, underwriting requirements, whether the insurer is admitted in California, etc.
Which of the following is least important in preparing a bid for a home construction project? overhead and profit cost of materials cost of labor cost of permits
Correct answer: cost of permits
What is the best method of adjusting inventory in the general ledger? averaging last year's inventory adding new purchases counting the existing inventory subtracting what you have used
Correct answer: counting the existing inventory Additional Notes: Count the inventory and then adjust the general ledger to show the actual inventory.
Of the following, which is best for determining the number of hours required for different phases of a project and for making sure the job is on schedule? review plans bar graph and chart cash analysis chart critical path method
Correct answer: critical path method Additional Notes: The critical path method is a scheduling technique that involves breaking a project into the essential tasks that determine the time required for completion.
On a large job, what is the best way to make an efficient schedule? follow your punch list bar chart critical path method (CPM) any are correct
Correct answer: critical path method (CPM)
If an employee is 20 minutes late for work, the employer may: not deduct from wages deduct an hour's wage deduct for 20 minutes only deduct a half hour's wage
Correct answer: deduct a half hour's wage Additional Notes: The employer may deduct a half hour's wages for any time lost during the first 30 minutes of the workday.
Using money from a current job to pay for unrelated projects is called: transmigration penury usury diversion
Correct answer: diversion Additional Notes: Diversion is a cause for disciplinary action (Business and Professions Code Sec. 7108).
Who is responsible for selecting materials when refilling a first-aid kit for a jobsite? doctor first-aid tech RN nurse
Correct answer: doctor Additional Notes: The General Industry Safety Orders require that first-aid materials be "approved by the consulting physician." The doctor does not have to refill the kit but must decide on the contents.
A contractor, on his own initiative, changed the design of a building and carried out the change. The owner rejected the change and stated that the building has lost market value. If the owner takes the contractor to court and obtains a favorable judgment, the owner is: due only the loss of market value entitled to a new building due any loss of profits due the cost of repairs or the loss of market value
Correct answer: due the cost of repairs or the loss of market value Additional Notes: In most cases, the courts will award the owner either the cost of repairs or the loss of market value, whichever is less.
All of the following are causes for disciplinary action except: allowing your license to be used by an unlicensed contractor during bankruptcy, settling obligations incurred as a contractor for less than the full amount owed entering into a contract with another contractor who is not licensed willful or deliberate failure to pay money when due for materials or services
Correct answer: during bankruptcy, settling obligations incurred as a contractor for less than the full amount owed Additional Notes: Sample question No.1 from the CSLB Study Guide. Disciplinary action by the Registrar will not be taken against a licensee for avoiding or settling obligations for less than the full amount during bankruptcy (Business and Professions Code Section 7113.5).
Which of the following is not covered by standard contractor's insurance policies? job materials contractor's tools damage from fire, storm, theft, and vandalism employees' tools
Correct answer: employees' tools Additional Notes: The common kinds of coverage, including property insurance, do not cover employees' tools. Employees should be encouraged to purchase their own insurance policies.
Who pays FUTA? employee 50% employer and 50% employee employer 90% employer and 10% employee
Correct answer: employer Additional Notes: Unemployment taxes, whether FUTA (federal unemployment) or State unemployment insurance, must be paid by the employer.
If you are required to report employment taxes or give tax statements, the ___ must obtain a federal Employer Identification Number. bookkeeper employee and employer employee employer
Correct answer: employer Additional Notes: You would use IRS Form SS-4 to apply for a federal Employer Identification Number.
Who must pay for a pre-employment physical? workers' compensation insurer employee employer and employee employer
Correct answer: employer Additional Notes: Labor Code Section 25 requires the employer to pay for pre-employment physicals.
If an employee is fired as a result of a garnishment, he must notify ______ within ______ days, if he intends to file a claim disputing lost wages following the firing. Labor Commissioner / 30 employer / 60 employer / 30 Labor Commissioner / 60
Correct answer: employer / 30 Additional Notes: The employee must give notice to the employer, within 30 days of being fired, of his/her INTENT to file a wages claim, but has 60 days to file the actual claim with the Labor Commissioner.
When preparing a bid, you should: schedule the job to slightly overload your capacity put as little in writing as possible evaluate the effect of unexpected delays on costs none are correct
Correct answer: evaluate the effect of unexpected delays on costs Additional Notes: Jobs rarely proceed as planned. Many estimators add a small amount to the bid as a "fudge factor. "
A home improvement salesperson's registration must be renewed: once per year. for every job. every two years. every four years.
Correct answer: every two years. Additional Notes: A home improvement salesperson's registration expires two years from the last day of the month in which the registration was issued.
What is a likely penalty for contracting for jobs with an inactive license? permanent revocation of license fine and/or license suspension for up to one year fine, one-year license suspension, and a minimum of six months in jail temporary suspension of license only
Correct answer: fine and/or license suspension for up to one year
If you get a quote from a material supplier, the quote is: a guaranteed price that cannot increase not firm and can change firm but may not include all materials firm and includes all materials
Correct answer: firm but may not include all materials Additional Notes: Our recommended answer is based on one of the references listed in the CSLB Study Guide. It states, "Suppliers will stand behind their quoted cost for every item they price, but they won't guarantee to quote every item on your prints or materials list." Also, a supplier may limit the quote to a certain time period (e.g., 30 days).
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? 90 days five years one year three years
Correct answer: five years Additional Notes: A license expires if it is not renewed by the due date. You can still renew the license for up to five years from expiration by sending the Registrar a renewal form and delinquency fee. After five years, the license becomes void. You must apply for a new license and take the exams again. This was recently increased from three years.
Business records must be kept and made available for inspection by the Registrar of Contractors for a period of __________ after completion of a construction project or operation. two years three years one year five years
Correct answer: five years Additional Notes: Failure to keep records for five years after completion of a project is grounds for disciplinary action under Business and Professions Code Section 7111.
If a contractor forgets to renew his or her license on time, the expired license may be renewed any time within _________ after its expiration without reapplying for a license and fulfilling the exam or waiver requirements again. four years one year two years five years
Correct answer: five years Additional Notes: This policy has recently changed. You currently have up to five years to renew your license. If the State does not offer five years as an answer choice then the correct answer is three years. If the State offers both three years, and five years as possible answers you should choose "five years" and challenge the question.
Which funds does the stop notice block? from the owner to the material supplier from the owner to the subcontractor from the owner to the prime contractor from the prime contractor to the subcontractor
Correct answer: from the owner to the prime contractor Additional Notes: The stop notice requires the owner to withhold a specific amount of money from the prime contractor.
At the end of each month, data are posted from the bookkeeping journals to the: receipts journal payment journal general ledger general journal
Correct answer: general ledger Additional Notes: Entries in the specialized journals are transferred to the general ledger at the end of each month.
Before you build on landfill you must notify: government engineers government/engineers architect
Correct answer: government/engineers Additional Notes: The building department of most cities and counties require an engineer's soil report in addition to standard plans when construction is proposed on a landfill area or in areas where there is a danger of landslides.
The following clause is included in a contract:"THE CONTRACTOR IS NOT RESPONSIBLE FOR DELAYS CAUSED BY WEATHER, EARTHQUAKES, FLOODS, OR OTHER ACTS OF GOD."This clause would limit the contractor's liability for delays caused by: heavy rains suppliers not delivering materials on time lack of working capital a labor strike
Correct answer: heavy rains Additional Notes: This statement is especially important in contracts that include a specific completion date for the work.
Which of the following are employees not required to learn? how to conduct tailgate safety meetings safety features of tools first-aid procedures CPR
Correct answer: how to conduct tailgate safety meetings Additional Notes: Tailgate (also called "toolbox") safety meetings are conducted by supervisors and usually cover first-aid, CPR, proper use of equipment, safety devices, etc.
Why would a contractor have a case in a Superior Court? if it is transferred from a Small Claims Court if it is a dispute of more than $25,000 if it is transferred from a Municipal Court if two or more parties are involved in the case
Correct answer: if it is a dispute of more than $25,000
On a job site, a Cal/OSHA inspector discovers a piece of equipment that is hazardous. A temporary variance may be granted: if the equipment was recently repaired if the equipment is new and can be fixed before use if the equipment can be repaired on-site if the equipment can be recycled
Correct answer: if the equipment is new and can be fixed before use Additional Notes: If the equipment is new and requires extra time to bring it into compliance, the employer may apply for a temporary variance. A variance will be granted only after notice is given to the employees and a hearing is held by DOSH.
When an employee who is not hired for a specified period quits, the employee must be paid: immediately within 5 days of quitting never half immediately with the balance due within 30 days
Correct answer: immediately Additional Notes: Given the wording of this question, the only possible answer is "immediately." The rule is that if an employee quits without giving previous notice, the employee must be paid within 72 hours (or 3 days) of quitting. An employee who has given 72 hours previous notice is entitled to wages at the time of quitting.
Where must a contractor include the "Notice to Owner"? in all public and private works contracts in all home improvement contracts in all contracts for government projects in all home improvement contracts over $500
Correct answer: in all home improvement contracts over $500 Additional Notes: The "Notice to Owner" must be a part of any home improvement contract (including swimming pool contracts) for more than $500.
If an employee quits without prior notice, the contractor must pay wages: immediately, but 3 days' wages may be deducted immediately in full, within 3 days of quitting in part, with the balance due within the month
Correct answer: in full, within 3 days of quitting Additional Notes: The employee quit without notice. According to Labor Code Sec. 202, the wages must be paid within 72 hours (3 days).
A(n) ________ summarizes revenues, cost of sales, and operating expenses over a period of time. income statement balance sheet cash flow statement profit plan
Correct answer: income statement Additional Notes: The income statement is also known as the profit-and-loss statement.
If a subcontractor were to serve the owner with a stop notice, the most likely reason would be to: inform the owner that the owner's property will be attached if payment is not made 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 notify the owner that a lien will be filed against the property if the subcontractor is not paid notify the owner that the subcontractor has completed his portion of the work
Correct answer: 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 Additional Notes: The same reasoning would apply to a stop notice delivered to a lender. But unlike a property owner, the lender may ignore the stop notice unless it includes a bond for 125% of the amount claimed.
Where would a contractor obtain a surety bond? Contractors' State License Board bank credit union insurance agent
Correct answer: insurance agent Additional Notes: A contractor's license bond is an example of a surety bond.
Of the following, who may not approve a set of plans in the State of California? owner-builder architect engineer interior designer
Correct answer: interior designer Additional Notes: Some building authorities allow an owner-builder to sign plans of a very limited scope (e.g.,short retaining walls).
How often should the safety supervisor be at the job site? once a week it depends on the work being done only when dangerous equipment is used or about to be used once a day
Correct answer: it depends on the work being done Additional Notes: Demolition and other high-risk projects require the continuous presence of a safety supervisor. However, work like carpet laying, tile setting, and landscaping does not usually require constant supervision, at least for safety purposes.
Of the following, which is usually the most difficult item to estimate? materials overhead labor profit
Correct answer: labor Additional Notes: Labor is usually the most difficult item to estimate. A cost accounting system can help you analyze labor productivity, spot lost time, and prepare more accurate labor estimates.
Which of the following muscles should be used more when lifting heavy materials? arms back legs shoulders
Correct answer: legs
The purpose of a specification sheet attached to a set of plans is to: show a certain detail on the plan. let the contractor know what has to be done. show what materials need to be used. show specific dates of completion.
Correct answer: let the contractor know what has to be done.
The "Notice to Owner" is given to: let the owner know the property can be liened inform the owner when work will begin and end let the owner know a mechanic's lien has been filed against the property inform the owner that you are going to improve the property
Correct answer: let the owner know the property can be liened Additional Notes: The "Notice to Owner" provides basic information on mechanic's liens. It does not state that the owner's property has been liened but does say that liens can be filed against the property by persons who have not been paid for their labor or materials. The Notice warns: "This can happen even if you [the owner] have paid your contractor in full if the subcontractors, laborers or suppliers remain unpaid."
When a dispute over an alleged violation is referred to arbitration, the CSLB Registrar looks for: licensee has 2 or less violations in past 10 years. license in good standing at time of alleged violation. all parties have agreed to private arbitration. amount of damage is over $50,000.
Correct answer: license in good standing at time of alleged violation. Additional Notes: To qualify for CSLB arbitration, the contractor cannot have a record of prior violations. The parties cannot have previously agreed to private arbitration. Otherwise, arbitration is mandatory for allegations of $5,000 or less, but also offered for claims up to $50,000.
When demolishing a three-story structure, which agency would you contact first? local building department state national county
Correct answer: local building department Additional Notes: A Cal/OSHA (state) permit is required for demolition of buildings more than three stories high. The Uniform Building Code requires a permit for demolishing any building. You should first contact the local building department.
Which agency would you contact when changing the location of a driveway on private property? local building department state national county
Correct answer: local building department Additional Notes: The first agency to contact would be the local building department. A permit may or may not be required depending on the type of construction. Uniform Building Code Section 106.2 exempts driveways and walks not more than 30 inches above grade and not over any basement or story.
Which could a contractor not otherwise determine without going to the job site? which subcontractors to use for the job measurements of the walls and ceiling what materials are needed location of the electrical source
Correct answer: location of the electrical source
A subcontractor who does not serve a preliminary notice: may not serve a stop notice but may file a mechanic's lien loses nothing because subcontractors are not required to serve preliminary notices loses both stop notice and mechanic's lien rights may not file a mechanic's lien but may serve a stop notice
Correct answer: loses both stop notice and mechanic's lien rights Additional Notes: On private works, the subcontractor must serve a preliminary notice within 20 days from first furnishing labor or materials.
If you find that you are not getting work because your bids are too high, you should try: using a standard 10% overhead figure lowering your fixed expenses hiring lower wage employees working for time and materials
Correct answer: lowering your fixed expenses Additional Notes: The State may offer a better answer choice. You should review all expenses. If expenses are rock-bottom and your bids are still too high, check to see if your markup for overhead and profit is realistic.
If an employer accrues more than $500 in federal withholding and social security taxes, tax deposits must be made: quarterly, based on a year beginning January 1 and ending December 31 quarterly, based on the calendar year monthly quarterly, based on company fiscal year
Correct answer: monthly Additional Notes: This is an older question that was written before the current tax laws went into effect. Currently, you must deposit either monthly, or semi-weekly. The schedule you must use is based on your total tax liability for the previous year.
If a sales presentation is made in Spanish, the home solicitation contract: must be translated into English and notarized may be in English if the writing is plain and simple must be co-signed by an English-speaking person if the contract is in English must be in Spanish
Correct answer: must be in Spanish Additional Notes: Civil Code Section 1689.7(a)(1) requires that a home solicitation contract be written in the same language "as principally used in the oral sales presentation."
Of the following, which would not be required in a written home improvement contract? name, address, and license number of the contractor name of the project the approximate dates when work will begin and be substantially completed a description of the work to be done
Correct answer: name of the project Additional Notes: The information required in home improvement contracts is listed in Section 7159 of the Business and Professions Code. The list does not include the name of a project.
What must licensed plumbing, electrical sign, and well drilling contractors have displayed on both sides of their commercial vehicles? name, business address, and contractor's license number name, business address, phone number, and contractor's license number nothing name and contractor's license number only
Correct answer: name, business address, and contractor's license number Additional Notes: Section 7029.5 of the Business and Professions Code requires that a C-36, C-45, or C-57 contractor display on both sides of their business vehicles "his or her name, permanent business address, and contractor's license number, all in letters and numerals not less than 1-1/2 inches high."
Where is the "Notice of Right to Cancel" found on a home improvement contract? near the client signature at the top of the page on the back in the middle of the page
Correct answer: near the client signature
What kind of information tells you if you are able to payoff your bills? current liability net current assets net working capital income statement
Correct answer: net working capital Additional Notes: Net working capital is the difference between current assets and current liabilities and is therefore available to meet expenses of daily operations. The "income statement" is an individual document.
What is the biggest problem facing new contractors when trying to obtain a performance or bid bond? they don't have a broker no prior track record poor credit None are correct
Correct answer: no prior track record Additional Notes: While poor credit could be a problem, the question specifically addresses "new" contractors - - who might have excellent credit, but can't show any history of job performance.
The purpose of a 20-day preliminary notice for private work is to: notify the owner that the person or firm who sent the notice has improved the property notify the owner that a lien has been placed on the property waive the contractor's or subcontractor's lien rights make the owner aware of the provisions of the mechanic's lien laws
Correct answer: notify the owner that the person or firm who sent the notice has improved the property Additional Notes: The purpose of the preliminary notice is to inform the owner that the sender has begun improving the owner's property by providing labor, services, equipment, and/or materials. It should not be confused with the "Notice to Owner," which explains the mechanics' lien laws.
To prevent cash flow problems at the end of a construction project, the contractor should: ask the owner to make payments before they are due. order all materials before beginning work. seriously consider changing the payment schedule. obtain a line of credit from a bank.
Correct answer: obtain a line of credit from a bank. Additional Notes: A line of credit will provide cash until the retention period expires and the contractor receives the final payment. Changing the payment schedule may not be an option after a contract is signed. The owner is not obliged to change the schedule or accelerate payments.
For which of the following would you not obtain a short-term loan? job materials wages bid bond office rent
Correct answer: office rent Additional Notes: Office rent is a fixed overhead expense. The others are direct construction costs that may be financed for a particular project.
Which of the following is considered a fixed expense? materials wages office supplies office rent
Correct answer: office rent Additional Notes: Rent is considered a fixed expense because it remains fairly constant over time. The other expenses listed would vary with production.
How often should a job supervisor or responsible managing employee visit the job site? whenever he is near the job site once a week once a month once a day
Correct answer: once a day Additional Notes: According to the references listed in the CSLB Study Guide, either the contractor, job supervisor, or RME should visit the site every day. If possible, talk briefly to each employee.
How long after an employee's termination should a company maintain the employee's time card? four years two years three years one year
Correct answer: one year
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? closed account unsecured loan uninsured load open account
Correct answer: open account Additional Notes: Open account credit, which is usually limited to a certain amount, allows a contractor to defer payment for materials. Most suppliers will require a new contractor to submit a credit application before extending open account credit.
An owner objects to the materials being used for a job and complains to a worker. Upon learning of the complaint, the contractor should: ignore the complaint write a letter to the owner as soon as possible order the crew to stop work immediately until an on-site meeting can be scheduled with the owner contact the owner immediately and explain why the specific materials are being used
Correct answer: order the crew to stop work immediately until an on-site meeting can be scheduled with the owner Additional Notes: Deal with the problem immediately. Also, in this case, the crew should not continue work if the owner objects to the materials being installed.
Fixed costs apply to which of the following categories? travel expenses direct costs overhead labor
Correct answer: overhead Additional Notes: Overhead includes indirect costs that may be fixed (e.g., rent and loan payments) or variable (e.g., office supplies and payroll taxes). Direct costs are charged directly to specific projects and vary from job to job. Examples include materials and subcontractors.
When a contractor is bidding a job, which of the following is the biggest risk factor? owner's financial stability change orders finding subs small extras
Correct answer: owner's financial stability
Who must sign a joint control addendum to a home improvement contract? owner, contractor, and joint control officer contractor only owner, contractor, and Notary Public owner and contractor
Correct answer: owner, contractor, and joint control officer Additional Notes: A joint control addendum is an attachment to a home improvement contract, authorized by Section 7159 of the Business and Professions Code. A joint control agreement is a relatively new payment plan designed primarily to protect the owner. In this plan, a third-party control service acts as an escrow agent for the owner's construction funds.
A client wants the house painted and carpet installed. What license classification(s) is/are required for this work? painting and decorating (C-33) and flooring and floor covering (C-15) classifications general building (B) classification painting and decorating (C-33) classification painting and decorating (C-33), flooring and floor covering (C-15), and general building (B) classifications
Correct answer: painting and decorating (C-33) and flooring and floor covering (C-15) classifications Additional Notes: This is an old question, and reflects old laws. Currently, the "B" license allows contractors to take jobs requiring two unrelated trades, but prior to 1998, "B" contractors could only take jobs requiring at least three unrelated trades. In this question, only two trades are involved, so you would need a C-33 to do the painting, and a C-15 to install the carpet. If you see this question on the State exam, choose answer "B", but challenge the question.
Which of the following improvements does not require a building permit? in-ground swimming pool room addition roof painting and wallpaper hanging
Correct answer: painting and wallpaper hanging Additional Notes: Section 301 of the Uniform Building Code lists work that is exempt from the building permit requirement. The list includes "painting, papering, and similar finish work." Above- ground prefabricated swimming pools with a capacity of less than 5,000 gallons are also exempt.
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: simply file contractor's license bond apply for a new license pay a delinquency fee to renew license complete and file a delinquent license renewal form
Correct answer: pay a delinquency fee to renew license Additional Notes: A license that is not renewed within five years from its expiration date becomes void. If Star Construction does not renew within five years, they will have to apply for a new license. This was recently increased from three years.
The best two methods of keeping track of job expenses are: expense journal and general ledger general ledger and payroll journal payroll journal and expense journal general journal and general ledger
Correct answer: payroll journal and expense journal Additional Notes: These are also known as a payroll register and a job cost register.
Which of the following is considered a direct cost? insurance telephone use by employees personal vehicle payroll tax
Correct answer: payroll tax Additional Notes: Payroll tax is part of the labor cost which is a direct cost.
Which type of bond guarantees job completion? payment bond performance bond bid bond labor and materials bond
Correct answer: performance bond Additional Notes: A performance bond guarantees that the job will be completed according to plans and specifications. The payment bond (also called a "labor and materials" bond) guarantees payment of subcontractors and material suppliers. A bid bond guarantees that the contractor will sign the contract and provide any required performance and payment bonds if the contractor's bid is accepted.
A health and safety order must be: posted in an administrative office that is available to employees handed out by supervisors at their quarterly meetings handed out with monthly pay checks posted in a conspicuous place at the job site
Correct answer: posted in a conspicuous place at the job site Additional Notes: Labor Code Section 6318 requires that citations or orders be prominently posted "at or near each place a violation referred to in the citation or order occurred. "
The most economical way to obtain insurance is to: choose one agent who handles all lines of insurance price-shop with several agents deal with only one insurance company change insurance companies frequently
Correct answer: price-shop with several agents Additional Notes: Again, you should obtain quotes from different agents.
A payment bond guarantees that the bonding company will pay valid claims for unpaid bills owed by the _______________ posting the bond. prime contractor or property owner prime contractor or subcontractor property owner or material supplier subcontractor or material supplier
Correct answer: prime contractor or property owner
A payment bond would be posted by the: property owner or material supplier. prime contractor or subcontractor. subcontractor or material supplier. prime contractor or property owner.
Correct answer: prime contractor or property owner. Additional Notes: The prime or the owner may post a payment bond. Some contracts require the prime to post the bond. Owners will often post a payment bond after a lien is filed against the property.
Of the following four items to consider when bidding, which is the most important? materials overhead labor profit
Correct answer: profit Additional Notes: The references listed in the CSLB Study Guide consider profit as essential to the continuation of a business. Insufficient profits will create cash flow problems and threaten capitalization.
How often are FICA taxes reported and paid? monthly weekly quarterly yearly
Correct answer: quarterly Additional Notes: FICA taxes are reported and paid quarterly. However, employers with large payrolls are required to make monthly or semiweekly tax deposits.
How often are FUTA tax deposits made by most employers? yearly weekly monthly quarterly
Correct answer: quarterly Additional Notes: FUTA is reported annually, but most employers make quarterly tax deposits. If the tax for a calendar quarter is more than $100, the employer must deposit the amount owed by the last day of the month following the end of the quarter. For example, the FUTA deposit for the first quarter (Jan-Feb-Mar) is due no later than April 30
Which of the following financial ratios is the strictest measure of liquidity? profitability ratio quick ratio current ratio leverage ratio
Correct answer: quick ratio Additional Notes: The quick (acid-test) ratio is stricter than the other ratios because it considers only "quick" assets, such as cash, accounts receivable, and others that can easily be converted to cash.
Which of the following procedures BEST ensures error-free bids? working with an attorney rechecking the bid before submitting it to the client having another person draft the bid discussing details of the bid with the supplier
Correct answer: rechecking the bid before submitting it to the client Additional Notes: This is a sample question from the CSLB Study Guide.
When an owner signs a receipt for a stop notice, it usually means the owner: recognizes that work will stop in 30 days owes money to the contractor for labor and materials recognizes that a lien could be placed on funds owes the sub money
Correct answer: recognizes that a lien could be placed on funds Additional Notes: A stop notice is sometimes referred to as a "lien on funds."
Employees working on Sunday are normally paid: double time time and a half regular time triple time
Correct answer: regular time Additional Notes: Work over 40 hours in a week must be paid at 1-1/2 the regular rate, but an employee who works on Sunday in place of another day, and is still within 40 hours, gets regular pay unless an extra amount was offered as an incentive.
Which of the following are the best examples of fixed costs? advertising, office supplies, equipment maintenance rent, truck payment, insurance mortgage, fuel, utilities rent, utilities, equipment maintenance
Correct answer: rent, truck payment, insurance
If you notice that the plans do not specify a fireproof door where one is required, you should: fix it yourself talk to the owner report it to the architect install the door and bill the client
Correct answer: report it to the architect
State disability and income taxes are: reported and paid yearly paid quarterly and reported yearly reported and paid quarterly reported quarterly and paid yearly
Correct answer: reported and paid quarterly Additional Notes: State disability and income taxes are withheld from the employee's wages by the employer and reported and paid quarterly to the Employment Development Department.
When spraying toxic materials, which of the following safety equipment must be worn? safety goggles hooded suit respirator specifically designed for that material none, toxic materials should never be sprayed
Correct answer: respirator specifically designed for that material Additional Notes: If you are spraying a material for which a respirator was specifically designed, you obviously need to wear one. "All are correct" would be an even better choice if offered as an answer.
Funds withheld to guarantee completion of a project and correction of defects are called a(n): retention stipulation umbrage remainder
Correct answer: retention Additional Notes: The terms "retainer" or "retainage" are also used.
An income statement shows: assets and liabilities over an extended period of time revenues and expenses over an extended period of time revenues and losses at a certain point in time assets and liabilities at a certain point in time
Correct answer: revenues and expenses over an extended period of time Additional Notes: An income statement also shows profit.
After the building plans are approved, what is the next step? review the plans for errors or corrections hire employees order materials schedule the job
Correct answer: review the plans for errors or corrections Additional Notes: The plans should always be reviewed before the job is scheduled, materials are ordered, etc. Pay particular attention to any notes made by the building department.
When a joint control addendum is used, which of the following does not have to be included in a home improvement contract? "Notice to Owner" owner's signature schedule of payments license number of the contractor
Correct answer: schedule of payments Additional Notes: A payment schedule is not needed because the control agent disburses funds as each phase of the project is completed.
Which of the following must be included in a home improvement contract? schedule of payments project name exact dates of job duration job specifications
Correct answer: schedule of payments Additional Notes: The payment schedule must be included in the contract. Only the approximate dates for beginning and completion of work are required. Job specs and project name do not have to be included in the contract.
In your construction business, the secretary handles the accounts receivable. These include: labor received and payments due services rendered and payments due material suppliers paid and services due labor paid and services rendered
Correct answer: services rendered and payments due Additional Notes: Accounts receivable are the amounts due from customers for labor, materials, services, etc.
When calculating unemployment and disability insurance taxes, an employer would not include: severance pay bonuses overtime pay wages
Correct answer: severance pay Additional Notes: As applied to State unemployment or disability insurance contributions, the term "wages" does not include severance pay.
Ms. Gomez applies for a job. Of the following, the only reason an employer may lawfully deny her employment is: she is Hispanic and everyone else is African-American or Caucasian she is over 50 years of age she has no work experience or Social Security number lifting is involved and she is a woman
Correct answer: she has no work experience or Social Security number Additional Notes: In general, you may not refuse to employ a person because of age, national origin, nationality, ancestry, race, sex, sexual orientation, marital status, religion, or handicap. However, an employer is not obligated to employ someone who does not have work experience or a Social Security number.
When applying for a permit to re-install wiring that has been removed from an old Victorian house, the minimum license needed is: specialty electrical license general contractor's license no specific license is required remodeler's license
Correct answer: specialty electrical license Additional Notes: The electrical contractor's (C-10) license classification covers installation of wiring, conduit, fixtures, etc. The term "general contractor" can refer to a general building (B) or general engineering contractor (A).
A customer wants to accept a bid but does not have enough money. A wise contract decision would be to: stick close to your bid even if it means losing the job eliminate the profit and take the job for overhead do the job at cost match the lowest bid of another contractor
Correct answer: stick close to your bid even if it means losing the job Additional Notes: In general, a contractor should not take a job that will not return a profit. But before refusing the job, the contractor might encourage the owner to limit the scope of the project to fit the owner's budget.
The most accurate method of estimating the cost of materials for a job is: material take-off stick-by-stick current price list price per square foot
Correct answer: stick-by-stick Additional Notes: According to one of the references in the CSLB Study Guide, stick-by-stick (also called stick) pricing is the most accurate method of estimating the cost of materials.
Which of the following is not considered overhead? advertising rent utilities storage
Correct answer: storage Additional Notes: All of the references listed in the CSLB Study Guide classify rent, utilities, and advertising as overhead expenses. Storage is usually listed under "Cost of Sales" (costs that can be directly charged to a specific job).
Which of the following costs is the easiest for the contractor to control? subcontract labor employees who are paid hourly direct labor indirect labor
Correct answer: subcontract labor Additional Notes: When putting together a bid, you should get a firm price from each subcontractor. This eliminates subcontract labor as a variable cost.
A contractor hires a subcontractor to demolish a concrete wall. Who is responsible for supplying safety goggles? subcontractor Cal/OSHA contractor property owner
Correct answer: subcontractor Additional Notes: The Labor Code distinguishes between employees and independent contractors. Assuming the subcontractor is properly licensed and insured and otherwise meets the legal criteria for status as an independent contractor, it would be the subcontractor's responsibility to supply goggles.
A subcontractor signs an unconditional waiver and release. This means that the: owner cannot ask anything more of the subcontractor. subcontractor cannot ask anything more of the owner. subcontractor cannot get anything from the prime. subcontractor cannot ask anything more of the prime.
Correct answer: subcontractor cannot ask anything more of the owner. Additional Notes: The bottom line is that the subcontractor is unconditionally giving up his or her right to file a lien against the owner's property.
Who furnishes MSDS sheets? contractor supplier Cal/OSHA DOSH
Correct answer: supplier Additional Notes: The Contractors License Law and Reference Book states: "Manufacturers of these [hazardous] substances must prepare Material Safety Data Sheets (MSDS), and the manufacturers or sellers of these substances must provide the MSDS to anyone who purchases them."
If a contractor has a bad set of plans, he or she should: do the job anyway reject the job talk to the owner and see if you can get a better set of plans talk to an architect
Correct answer: talk to the owner and see if you can get a better set of plans
Worker's compensation insurance covers injuries or illnesses: in all cases that are job-related in the event of theft that occur while on any job
Correct answer: that are job-related Additional Notes: The illnesses or injuries must be job-related. However, a worker need not be present at the job site when an injury occurs. For example, a foreman who is injured while driving to a building supply house to pick up materials for a job would be covered by the employer's worker's compensation insurance policy.
When a contract includes a "complete agreement" clause: the contractor must supply a completion bond the work must be completed by a certain date or the contractor must pay liquidated damages the contractor and owner are bound by the exact words of the contract the owner agrees to pay for the completion bond
Correct answer: the contractor and owner are bound by the exact words of the contract Additional Notes: According to one of the references listed in the CSLB Study Guide, a "complete agreement clause states that you're only obligated to do what's written down in the contract. Neither you nor the client can be held to any oral statements or unwritten promise."
If it is discovered that the construction materials in an area contain more than 0.1% asbestos: the crew should wet down the area with water and continue working the crew should try not to disturb the area but keep working the workers should stop and remove the materials wearing masks and gloves the contractor should contact DOSH immediately
Correct answer: the contractor should contact DOSH immediately Additional Notes: The contractor must obtain a permit from DOSH and hold a safety conference to discuss the methods and equipment that will be used to protect the workers.
The most important thing to include when advertising for construction work is: a list of all the owners of the company the company's complete name style the contractor's license number the company's address
Correct answer: the contractor's license number Additional Notes: Business and Professions Code Section 7030.5 requires that the company's license number appear in all forms of advertising. Sec. 861 of the CSLB's Rules and Regulations defines advertising as "any card, contract, proposal, sign, billboard, lettering on vehicles, registered in this or any other state, brochure, pamphlet, circular, newspaper, airwave transmission and any form of directory under any listing denoting 'Contractor' or any word or words of similar import or meaning requesting any work for which a license is required."
What can be flexibly interpreted when the following statement is in a contract?"THE CONTRACTOR IS NOT RESPONSIBLE FOR DELAYS CAUSED BY NATURAL DISASTERS OR ACTS OF GOD." payment schedule joint control the dates for starting and finishing work change orders
Correct answer: the dates for starting and finishing work Additional Notes: This statement amounts to a disclaimer in contracts that includes a specific completion date.
A time card includes: the days and hours the person worked how much a person earns per hour the employee's birth date and social security number where the job site is located
Correct answer: the days and hours the person worked Additional Notes: A typical time card includes the employee's name, the pay period, a job or project number, the days and hours the employee worked, and a description of the work. Labor Code Section 1812 requires that time cards or records for public works projects indicate "the name of and actual hours worked each calendar day and each calendar week by each worker employed."
When is the last day a customer can cancel a contract that was signed on Friday, December 21st? the following Wednesday the following Friday the following Thursday the following Tuesday
Correct answer: the following Wednesday Additional Notes: A customer has 3 business days to cancel a contract. A business day is any calendar day except Sundays and Holidays. In this instance, the first business day is Saturday, December 22nd, the second business day is Monday, December 24th. Tuesday, December 25th, is a holiday (Christmas), so the third business day is Wednesday, December 26th.
Which building code should a contractor follow? the most stringent the local code the national code the state code
Correct answer: the local code
A contract for the construction of a single-family dwelling must be signed by: the owner and contractor just the contractor the architect, owner, and contractor just the owner
Correct answer: the owner and contractor Additional Notes: Business and Professions Code Section 7164 requires that "every contract and any changes in a contract, between an owner and a contractor, for the construction of a single-family dwelling to be retained by the owner for at least one year shall be evidenced in writing signed by both parties."
When it comes to liens: suppliers cannot file a lien. subcontractors cannot file a lien. you can file a lien at any time. the owner is responsible for paying for the work of improvement.
Correct answer: the owner is responsible for paying for the work of improvement.
A Notice to Owner is there for the protection of: All are correct the contractor. the contractor's employees. the owner.
Correct answer: the owner. Additional Notes: The Notice explains the rights of both the contractor and the owner and their responsibilities to the employees. However, the CSLB emphasizes that the Notice protects owners by telling them how they can avoid liens.
If you are planning to dig, drill, and bore at a job site, you should notify _____ before starting work. the County Engineer DOSH the Environmental Protection Agency the regional Underground Service Alert Notification Center
Correct answer: the regional Underground Service Alert Notification Center Additional Notes: You must notify the regional Underground Service Alert Notification Center if you plan "to disturb the surface of the ground." A more exact definition of ground disturbance is not available.
A contractor must be licensed when: materials and supplies are greater than $1,500 the total bid is over $500 material and labor exceed $175 doing home improvements
Correct answer: the total bid is over $500 Additional Notes: The "minor work" exemption applies to bids where the combined value of labor, materials, and all other items is less than $500. A license is required if a bid is for $500 or more.
A contractor does not have to be licensed if: he carries insurance all of his jobs are under $1000 the value of labor and materials for a job is under $500 all of the potential customers are told that he is not licensed
Correct answer: the value of labor and materials for a job is under $500 Additional Notes: Contracts where the combined value of labor, materials, and all other items is less than $500 fall under the "minor work" exemption.
An RME may act as the qualifier for no more than ________ firms in any one-year period. three one four two
Correct answer: three Additional Notes: This rule applies to any qualifier--not just an RME.
DOSH must investigate a complaint charging a serious violation of health or safety standards within: five calendar days one working day two working days three working days
Correct answer: three working days Additional Notes: DOSH must investigate complaints charging serious violations within three working days. Complaints alleging nonserious violations must be investigated within 14 calendar days.
Contractors should keep good business records: in case the IRS audits them. for insurance purposes. to monitor the change in costs over a five-year period. to determine if the business is making a profit.
Correct answer: to determine if the business is making a profit. Additional Notes: Determining profit or loss would be at the top of the list of reasons for maintaining good records.
What is the pupose of a contract bond? to guarantee job completion only to guarantee job completion and payment of labor and materials to guarantee payment of labor and materials only it is a requirement of licensing
Correct answer: to guarantee job completion and payment of labor and materials
Records of accidents and injuries are kept: to help determine the causes of accidents and injuries for the exclusive benefit of employees to show the clients you are responsible to show the insurance adjuster
Correct answer: to help determine the causes of accidents and injuries
A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Of the following, which policy would be best for this purpose? general liability property umbrella builder's risk
Correct answer: umbrella Additional Notes: An umbrella policy provides higher liability limits than a standard policy and is recommended if you have substantial assets to protect.
When putting together a basic insurance package that meets your construction company's needs, which would not be considered? workers' compensation policy property insurance liability insurance umbrella policy
Correct answer: umbrella policy Additional Notes: The references listed in the CSLB Study Guide recommend that a construction company obtain property, liability, and workers' compensation insurance. An umbrella policy extends the limits of your coverage but is considered optional, especially for small businesses.
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: acceptable: Employees must show documentation of their Social Security number only if they are resident aliens working in this country. acceptable: A memorized Social Security number is sufficient. acceptable: New employees do not have to provide documentation of their Social Security number. unacceptable: The actual Social Security card should have been inspected.
Correct answer: unacceptable: The actual Social Security card should have been inspected. Additional Notes: If a prospective employee does not have a card, ask him or her to apply for one at the nearest Social Security office.
What is the most likely reason to lose a bid? vague specifications costs of materials were not obtained prices from subs were not exact 10% added to profit
Correct answer: vague specifications Additional Notes: Specifications that are poorly written usually lead to a wide range of bids.
In the cash system of accounting, a transaction is recorded or posted: when cash changes hands when an amount is approved for payment when cash is earned and expenses are incurred when an amount is invoiced
Correct answer: when cash changes hands Additional Notes: The cash system is said to be easier than the accrual system because only cash exchanges are recorded: Record income when the client pays, and record expenses when you make a payment. The accrual system would record an amount when you bill for it or when you receive a bill for it.
For which projects do you need a building permit? when it is required by the local building department for projects valued over $1000 you always need a building permit when it is a public works project
Correct answer: when it is required by the local building department
When does a prime contractor pay a subcontractor? every two weeks until the sub is completely finished with the project when the sub is done with her portion of the work, and the work has been inspected when the entire project is completed when the contractor receives final payment from the owner
Correct answer: when the sub is done with her portion of the work, and the work has been inspected Additional Notes: If the contract provides for progress payments, the prime must pay the sub within 10 days of receiving a progress payment.
A notice canceling a home solicitation contract becomes effective: within 72 hours from the postmark on the cancellation letter when signed by the owner the day the owner cancels by telephone when the written notice is deposited in the mail
Correct answer: when the written notice is deposited in the mail Additional Notes: Civil Code Section 1685 6(d) states: "Notice of cancellation, if given by mail, is effective when deposited in the mail properly addressed with postage prepaid."
When do you need to have an EIN? when you are a licensed contractor with no employees when you are a sole proprietor with employees when the business is in California when you own a retail store
Correct answer: when you are a sole proprietor with employees Additional Notes: This is the best choice of the answers given. An EIN (Employer Identification Number) is a federal requirement for ANY business with employees. A partnership or corporation will always need an EIN.
When is an employee allowed to view their own personnel file? whenever they wish to never during employee evaluations when they have a court order
Correct answer: whenever they wish to Additional Notes: This does not include viewing letters of reference, nor does it include records regarding investigations of possible criminal actions.
Excavators must clearly mark the boundaries of a work area, usually with _______ paint. red white yellow brown
Correct answer: white Additional Notes: Owners of underground installations within white boundary markings should use a contrasting color to mark the location of their lines. The recommended colors are: Red: electric Yellow: gas Orange: communications Blue: water Green: sewer
What color paint is normally used to mark an excavation area? white red green brown
Correct answer: white Additional Notes: At the site, excavators must clearly mark the boundaries of the work area, usually with white paint.
A stop notice on a public works project is used to: withhold sufficient money from the prime contractor to pay the subcontractors who file stop notices stop all payments to the prime contractor until the subcontractors are paid stop all construction activity on a particular job lien the property
Correct answer: withhold sufficient money from the prime contractor to pay the subcontractors who file stop notices Additional Notes: The same answer would also apply to a stop notice on a private work.
A contractor and a homeowner sign a home solicitation contract. If the owner lawfully cancels the contract, how long does the contractor have to pick up unused materials that were delivered to the owner's property? It's too late: If the materials are delivered to the property before a notice of cancellation is received, the materials become the property of the owner. within 24 hours after cancellation within 10 days after cancellation within 20 days after cancellation
Correct answer: within 20 days after cancellation Additional Notes: If you receive a notice of cancellation, the materials should be picked up as soon as possible. According to Civil Code Section 1689.11 (a), after 20 days the materials become the property of the owner.
Form I-9 must be completed by all employees, including U.S. citizens. When must an employer complete form I-9? he first day they start work when they apply for the job within 3 business days of the date of hire within 30 business days of the date of hire
Correct answer: within 3 business days of the date of hire Additional Notes: Be sure to read this question carefully, because the requirements are different for employer and employee. Part 1 of the form must be completed by the employee when they start work. Part 2 must be completed by the employer within 3 days. If the person will be employed for less than three days, the form must be completed by the end of the employee's first working day.
When bidding on work, which of the following would you not include in the price of your bid? worker's compensation insurance premium overhead all are correct profit
Correct answer: worker's compensation insurance premium Additional Notes: Worker's compensation premiums are not figured as a separate item in a bid. However, your figure for labor should be based on an hourly rate that reflects the cost of workers' compensation, payroll taxes, retirement benefits, and other "hidden" labor costs.
A small contractor with no employees is working out of his garage. Which of the following types of insurance is not necessary at this time? property damage workers' comp general liability commercial vehicle
Correct answer: workers' comp Additional Notes: The key fact in this question is that the contractor does not have employees.
Which of the following may not be deducted from an employee's paycheck? Medicare tax workers' compensation insurance premiums SDI FICA
Correct answer: workers' compensation insurance premiums Additional Notes: Labor Code Section 3751 makes it a misdemeanor for an employer to deduct any amount from an employee's paycheck for workers' compensation insurance premiums.
In Small Claims Court, if you want to be represented by an attorney (lawyer): you cannot consult with attorney in Small Claims Court. the attorney must remain quiet except when consulting. the attorney is limited to 10 minutes of bench time. you are limited to one attorney.
Correct answer: you cannot consult with attorney in Small Claims Court. Additional Notes: Consultation with an attorney (lawyer) is not allowed in small claims court. If the defendant appeals the Small Claims judgment to Superior Court, the defendant may hire an attorney to argue the appeal.
You are bidding as a prime contractor on a public works project. The work will not involve construction, improvement, or repair of streets, highways, or bridges. You will use subcontractors for part of the work. If you do not name a subcontractor for any part of the work: the contract is canceled you may simply submit a name later you will do that part of the work yourself the awarding authority will choose a subcontractor for you
Correct answer: you will do that part of the work yourself Additional Notes: According to the Subletting and Subcontracting Fair Practices Act, a contractor who fails to name a subcontractor for a portion of the work exceeding 1/2 of 1 % of the total bid "agrees that he is fully qualified to perform that portion himself, and that he shall perform that portion himself. "