California Contractor Licensing and Regulations, Exams of Contract Law

Download California Contractor Licensing and Regulations and more Exams Contract Law in PDF only on Docsity! CONTRACTORS LAW EXAM CA EXAM 2024 | 2 DIFFERENT EXAMS | 200 QUESTIONS AND CORRECT ANSWERS (GRADED A+) | VERIFIED ANSWERS | LATEST VERSIONS CONTRACTORS LAW EXAM CA (FIRST EXAM) Your accountant advises you to set up a cost management system. What does this system do? a. It gives a cost history to analyze labor and material costs. b. It shows where profits and losses are. c. It shows costs of materials only. d. It compares what others are charging for subcontracted work. ------ CORRECT ANSWER---------------a. It gives a cost history to analyze labor and material costs. An employee workd 60 hours in one week. If the hourly wage rate is $12, what are the gross wages? a. $600 b. $840 c. $960 d. $1,080 ------CORRECT ANSWER---------------b. $840 Gross wages = Regular Time + Overtime Regular Time = 40 hrs x $12/hr = $480 Overtime = 20 hrs x 1.5 x $12/hr = $360 Gross Wages = $480 + $360 = $840 A(n) _____ represents a company's financial position on a specified date. a. balance sheet b. income statement c. cash flow statement d. profit plan ------CORRECT ANSWER---------------a. balance sheet A(n) _____ summarizes revenues, costs of sales, and operating expenses over a period of time. a. profit plan b. balance sheet c. cash flow statement d. income statement ------CORRECT ANSWER---------------d. income statement An employer must furnish an employee with a completed IRS Form W-2 (Wage and Tax Statement) by: a. January 1 b. January 31 c. April 15 d. the final day of employment ------CORRECT ANSWER---------------b. January 31 Which of the following financial ratios is the strictest measure of liquidity? a. quick ratio b. current ratio c. profitability ratio d. leverage ratio ------CORRECT ANSWER---------------a. quick ratio The Federal Employer Identification Number (EIN) is issued by the: a. Franchise Tax Board b. Board of Equalization c. Internal Revenue Services d. Employment Development Department ------CORRECT ANSWER--------- ------c. Internal Revenue Service d. Posting a receivable to an accounts-payable account. ------CORRECT ANSWER---------------a. posting to the wrong accounts-receivable account. What kind of discount do lumber yards and other suppliers offer to contractors who pay their bills promptly? a. 1/2% - 1% b. 1% - 2% c. 4% - 8% d. 10% - 12% ------CORRECT ANSWER---------------b. 1% - 2% If a newly hired employee does not have an SSN, what should be done? a. The employee must apply for an SSN. b. The employer must apply on behalf of the employee for an SSN. c. If a W-2 is provided, an SSN is not needed. d. Call the police. ------CORRECT ANSWER---------------a. The employee must apply for an SSN. Once a budget is finalized, the: a. contractor should stick to the budget no matter what happens b. contractor should do the best possible job of staying within the budget c. budget should be revised each month d. budget should be referred to only if the business has cash flow problems ------CORRECT ANSWER---------------b. contractor should do the best possible job of staying within the budget Which of the following procedures BEST ensures error-free bids? a. working with an attorney b. having another person draft the bid c. discussing details of the bid with the supplier d. rechecking the bid before submitting it to the client ------CORRECT ANSWER---------------d. rechecking the bid before submitting it to the client Direct costs are $37,000, overhead is 12%, and profit is 5%. What is the selling price? a. $39,272.47 b. $41,373.45 c. $43,383.37 d. $44,578.31 ------CORRECT ANSWER---------------d. 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 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 What is the most likely reason to lose a bid? a. 10% added to profit b. vague specifications c. prices from subs were not exact d. costs of materials were not obtained ------CORRECT ANSWER------------- --b. vague specifications You are bidding 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? a. Bid on the job as though it were to code. b. Bid on the job as though it were to code, but ask the owner to sign a release of your responsibility. c. Bid on the job with the corrections in mind, and perform the corrections yourself to bring the work up to code. d. Decline to bid on the work. ------CORRECT ANSWER---------------d. Decline to bid on the work. After you have read the plans and specifications, what is the next important step in writing a bid? a. Talk to and select subs. b. Walk the job. c. Call about materials, price and availability. d. Talk to the crew leader about labor. ------CORRECT ANSWER-------------- -b. Walk the job. On a time and materials job, you should: a. not charge for profit and overhead b. add profit and overhead to labor only c. add profit and overhead to materials only d. add profit and overhead to labor and materials ------CORRECT ANSWER---------------d. add profit and overhead to labor and materials All of the following are causes for disciplinary action EXCEPT: a. allowing your license to be used by an unlicensed contractor b. entering into a contract with another contractor who is not licensed c. during bankruptcy, settling obligations incurred as a contractor for less than the full amount d. willful or deliberate failure to pay money when due for materials or service ------CORRECT ANSWER---------------c. during bankruptcy, settling obligations incurred as a contractor for less than the full amount is not cause for disciplinary action The qualifying RME for a construction firm must work at least: a. 32 hrs per wk or 80% of the work week b. 30 hrs per wk or 70% of the work week c. 24 hrs per wk or 65% of the work week d. 12 hrs per wk or 51% of the work week ------CORRECT ANSWER--------- ------a. 32 hrs per wk or 80% of the work week b. The down payment is limited to $1,000 or 10% of the total price, whichever is less. c. The contractor may require enough of a down payment to cover the total cost of materials, but not labor costs. d. Nothing. The contractor must wait until the work is completed to accept any payment. ------CORRECT ANSWER---------------b. The down payment is limited to $1,000 or 10% of the total price, whichever is less. When should you let an attorney see a construction contract? a. Before you let your client see the contract. b. After the contract is prepared, but before you sign it. c. After the building permit is obtained. d. After the contract is signed by you and your client. ------CORRECT ANSWER---------------b. After the contract is prepared, but before you sign it. If a sales presentation is made in Spanish, the home solicitation contract: a. must be in Spanish b. may be in English if the writing is plain and simple c. must be co-signed by an English-speaking person if the contract is in English d. must be translated into English and notarized ------CORRECT ANSWER- --------------a. must be in Spanish 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? a. within 24 hours after cancellation b. within 10 days after cancellation c. within 20 days after cancellation d. 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. ------CORRECT ANSWER---------------c. within 20 days after cancellation 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? a. bar graph and chart b. cash analysis chart c. review plans d. critical path method ------CORRECT ANSWER---------------d. critical path method Who is responsible for checking the site before the building inspector arrives? a. contractor b. owner c. foreperson d. architect ------CORRECT ANSWER---------------a. contractor Who would be held responsible if a contractor completes a project according to plans and later discovers that there is a building code violation? a. contractor b. architect c. both the contractor and the architect d. owner ------CORRECT ANSWER---------------c. both the contractor and the architect After a job is completed, the owner decides to have additional work done. How should the contractor proceed? a. Write a new contract and ask the owner to sign it. b. Make an oral agreement with the owner. c. Do the additional work for free. d. Get the owner to sign a change order. ------CORRECT ANSWER---------- -----a. Write a new contract and ask the owner to sign it. You have been awarded a job. It requires two days for site preparation and one day for clean-up. The contract involves two seaparate tasks - one lasting seven days and the other 10 days. If the two tasks can be done simultaneously, for how many days do you schedule the job? a. 7 days b. 13 days c. 15 days d. 20 days. ------CORRECT ANSWER---------------b. 13 days For which of the following would you not obtain a short-term loan? a. wages b. bid bond c. job materials d. office rent ------CORRECT ANSWER---------------d. office rent 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? a. daily b. at least once every ten working days c. at least once a month d. at least once a quarter ------CORRECT ANSWER---------------b. at least once every ten working days DOSH must investigate a complaint charging a serious violation of health or safety standards within: a. one working day b. two working days c. three working days d. five calendar days ------CORRECT ANSWER---------------c. three working days wants to sue his father for negligence in a civil action. Which of the following statements is CORRECT? a. John is not liable for damages in a civil action because the employee is his son. b. John is liable for damages in a civil action and must prove that the injury did not result from his negligence. c. In a civil action, John may use the defense that the injury was the result of the contributory negligence of his son. d. A civil action is not a possibility when the dispute involv ------CORRECT ANSWER---------------d. A civil action is not a possiblity when the dispute involves a job-related injury, unless the employer is not insured for workers' compensation. A prime contractor entered into a construction contract with a subcontractor. An employee of the subcontractor was injured, bu unfortunately, the subcontractor had not secured workers' compensation coverage. Which of the following statements best describes the situation, except in cased of fraud? a. The subcontractor is guilty, but the prime contactor is not responsible. b. The prime contractor is guilty, but the subcontractor is not responsible. c. Neither the prime contractor nor the subcontractor are responsible. d. The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. ------CORRECT ANSWER---------------d. The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. 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. a. one year b. two years c. three years d. five years ------CORRECT ANSWER---------------d. five years 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: a. $150 or more in labor only b. $200 or more in materials only c. $500 or more in labor and materials d. $500 or more in labor only ------CORRECT ANSWER---------------c. $500 or more in labor and materials When should a contractor renew the contractor's license bond? a. the day it expires b. 10 days before it expires c. 30 days before it expires d. within 30 days after it expires ------CORRECT ANSWER---------------c. 30 days before it expires 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? a. If Linda was listed as a partner on the liscense 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. b. If Linda applies for an individual license, the partnership license must be inactivated. c. Linda is not entitled to apply for an individual license. d. General partners may automatically receive an individual license if the are listed on the partnership license. ------CORRECT ANSWER--------------- a. 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. A subcontractor who does not serve a preliminary notice: a. may not sever a stop notice but may file a mechanic's lien b. may not file a mechanic's lien but may serve a stop notice c. loses both stop notice and mechanic's lien rights d. loses nothing because subcontractors are not required to file preliminary notices ------CORRECT ANSWER---------------c. loses both stop notice and mechanic's lien rights When an owner signs a receipt for a stop notice, it usually means the owner: a. owes money to the contractor for labor and materials b. recognizes that work will stop in 30 days c. owes the sub money d. recognizes that a lien could be placed on funds ------CORRECT ANSWER---------------d. recognizes that a lien could be placed on funds What possible reason would an owner for requiring an unconditional lien release from a subcontractor? a. The lien release protects the prime contractor. b. A lien release informs the owner of progress on the job. c. A lien release provides for rights of cancellation. d. The owner's property covered by the release may not be liened. ------ CORRECT ANSWER---------------d. The owner's property covered by the release may not be liened. The CSLB has established a mandatory arbitration program of verified complaints in which the damages are: a. $1,000 or less b. $7,500 or less c. $7,500 or more d. $5,000 to $20,000 ------CORRECT ANSWER---------------b. $7,500 or less Funds withheld to guarantee completion of a project and correction of defects are called a(n): a. remainder b. umbrage c. retention d. stipulation ------CORRECT ANSWER---------------c. retention Which of the following statements about home improvement laws is NOT correct? a. A subcontractor may give a salesperson a bonus. b. A general contractor may give a sales person a bonus. c. A subcontractor may not give the general contractor a bonus. d. The homeowner may give the salesperson a bonus. ------CORRECT ANSWER---------------d. The homeowner may give the salesperson a bonus. When you get an approved set of plans, what should you do first? a. Calculate the square footage. b. Call a material supplier. c. Schedule the job. d. Read any notes from the building department. ------CORRECT ANSWER---------------d. Read any notes from the building department. 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; a. the contract is canceled b. you will do that part of the work yourself c. you may simply submit a name later d. the awarding authority will choose a subcontractor for you ------ CORRECT ANSWER---------------b. you will do that part of the work yourself A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and Mr. Jones sign a contrat 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? a. No. Mr. Jones did not return the contract with the letter. b. No. Mr. Jones did not sign and return the cancellation form. c. Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract. d. No. However, the letter would have cancelled the contract had it been sent by certified or registered mail. ------CORRECT ANSWER---------------c. Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract. 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? a. 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. b. 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. c. Yes. If the contractor has reason to believe that the subcontractor has made an error in preparing his bid, the contractor should notify th ------ CORRECT ANSWER---------------c. 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. 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 judgement, the owner is: a. due the cost of repairs or the loss of market value b. due any loss of profits c. entitled to a new building d. due only the loss of market value ------CORRECT ANSWER--------------- a. due the cost of repairs or the loss of market value Of the following, which document is usually delivered first in a transaction involving a home improvement contract? a. three-day notice of right to cancel b. the contract c. "Notice to Owner" d. 20-day preliminary notice ------CORRECT ANSWER---------------c. "Notice to Owner" The applicant for a contractor's license receives a notice from the Contractor's State Licensing Board, dated October 1, that the applicant passed the written exam. To receive an active license, the applicant must file a license bond and fee no later than: a. October 31 b. October 29 c. December 30 d. January 1 ------CORRECT ANSWER---------------c. December 30 How many days does a contractor have to notify the Registrar after being issued a workers' compensation insurance policy? a. 5 days b. 10 days c. 30 days d. 90 days ------CORRECT ANSWER---------------d. 90 days What does it mean when a subcontractor signs a waiver and release form on a public works project? a. The subcontractor gives up the right to lien the real property. b. the subcontractor gives up the right to lien the construction funds. c. The subcontractor waives the right to lien the real property or the construction funds. d. The subcontractor is no longer responsible for correcting defective work. ------CORRECT ANSWER---------------b. the subcontractor gives up the right to lien the construction funds. Is it legal for a contractor to hire professional strikebreakers to replace striking employees? a. Yes. It is legal to hire professional strikebreakers. b. No. The contractor is subject to a maximum fine of $500 and/or maximum jail sentence of 30 days. c. No. The contractor is subject to a maximum fine of $1,000 and/or a maximum jail sentence of 90 days. d. The contractor has not committed a crime but may be subject to legal action. ------CORRECT ANSWER---------------c. No. The contractor is subject to a maximum fine of $1,000 and/or a maximum jail sentence of 90 days. Is it legal for a contractor to pay employees in cash? a. Yes, if the contractor provides each employee with a wage deduction statement semimonthly or at the time of each wage payment. b. Yes, if the contractor provides each employee with Form W-2 at the end of the year. c.No, because an employee's wages must be paid by a check with a wage deduction statement attached. d. No, unless the contractor obtains a receipt from each employee showing the amount of gross wages received. ------CORRECT ANSWER--------------- a. Yes, if the contractor provides each employee with a wage deduction statement semimonthly or at the time of each wage payment. A contractor hires a subcontractor to demolish a concrete wall. Who is responsbile for supplying safety goggles? a. Cal/OSHA b. subcontractor c. property owner d. contractor ------CORRECT ANSWER---------------b. subcontractor Some counties have an additional sales tax added to the base rate. Which of the following is a correct statement regarding this additional tax? a. This additional tax does not apply to contractors. b. You do not have to pay this additional tax if your home office is in another county. c. You may pay the additional tax charged in your county if the rate is lower than the county where the materials were purchased. d. You must pay the additional tax in the county where the materials were purchased. ------CORRECT ANSWER---------------d. You must pay the additional tax in the county where the materials were purchased. Where is the "Notice of RIght to Cancel" found on a home improvement contract? a. at the top of the page b. near the client signature c. in the middle of the page d. on the back ------CORRECT ANSWER---------------b. near the client signature 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? a. 5 business days b. 5 calendar days c. 7 business days d. 7 calendar days ------CORRECT ANSWER---------------c. 7 business days Which of the following is considered a direct cost? a. telephone use by employees b. personal vehicle c. insurance d. payroll tax ------CORRECT ANSWER---------------d. payroll tax Which act establishes the rights of workers to organize into unions and negotiate contracts? a. Civil Rights Act of 1964 b. Civil Rights Act of 1972 c. Civil Rights Act of 1984 d. National Labor Relations Act of 1935 ------CORRECT ANSWER------------ ---d. National Labor Relations Act of 1935 When is the last day a customer can cancel a contract that was signed on Friday, December 21st? a. the following Friday b. the following Tuesday c. the following Wednesday d. the following Thursday ------CORRECT ANSWER---------------c. the following Wednesday; customer has 3 business days to cancel a contract. What is the maximum allowed travel distance from any point of a work area to a fire extinguisher? a. 25 feet b. 50 feet c. 75 feet d. 150 feet ------CORRECT ANSWER---------------c. 75 feet Why would a contractor have a case in Superor Court? a. if it is transferred from a Small Claims Court AB 2040 requires that before work begins on a project, the contractor must inquire of the owner whether asbestos is present in any building constructed prior to: A. 1968 B. 1978 C. 1982 D. 1985 ------CORRECT ANSWER---------------B. 1978 After the building plans are approved, what is the next step? A. review the plans for errors or corrections B. hire employees C. schedule the job D. order materials ------CORRECT ANSWER---------------A. review the plans for errors or corrections What is the penalty for obtaining and providing to another any part of the exams administered by the Contractors' State License Board? A. $500 fine B. misdemeanor conviction C. the exam will be forfeited, and the applicant may not reapply for one year D. all of the above ------CORRECT ANSWER---------------D. all of the above How often should the safety supervisor be at the job site? A. once a week B. only when dangerous equipment is used or about to be used C. once a day D. it depends on the work being done ------CORRECT ANSWER-------------- -D. it depends on the work being done How often are FUTA tax deposits made by most employers? A. weekly B. monthly C. quarterly D. yearly ------CORRECT ANSWER---------------C. quarterly An employer who receives a citation for a serious violation of Cal/OSHA regulations can be assessed a penalty of up to _____ for each violation. A. $1,000 B. $5,000 C. $10,000 D. $25,000 ------CORRECT ANSWER---------------D. $25,000 _____, although usually the largest single item in a bid, can be fairly accurately determined. A. Permits B. Overhead C. Labor D. Materials ------CORRECT ANSWER---------------D. Materials Which of the following are employees NOT required to learn? A. CPR B. how to conduct tailgate safety meetings C. safety features of tools D. first-aid procedures ------CORRECT ANSWER---------------A. CPR A notice canceling a home solicitation contract becomes effective: A. when the written notice is deposited in the mail B. when signed by the owner C. the day the owner cancels by telephone D. within 72 hours from the postmark on the cancellation letter ------ CORRECT ANSWER---------------A. when the written notice is deposited in the mail Unsafe or faulty equipment is found on a job site. What should be done? A. The contractor should call Cal/OSHA. B. It is the contractor's responsibility to correct the problem. C. It is the property owner's responsibility to correct the problem. D. It is the employees' responsibility to correct the problem. ------CORRECT ANSWER---------------B. It is the contractor's responsibility to correct the problem. Bob Smith is the RME for the XYZ Construction Co., where he works all week. His own construction business, under a different name and license number, builds decks on weekends. Is this an acceptable practice for Bob? A. Yes: Bob may qualify as many licenses as he desires. B. Yes: Bob may qualify both licenses provided that he is regularly employed by XYZ and is actively involved in the operation of the business at least 32 hours per week or 80% of XYZ's total operating hours per week, whichever is less. C. No: Bob must take another qualifying exam to qualify a second license. D. No: Bob may qualify only XYZ Co.'s license in this case. ------CORRECT ANSWER---------------D. No: Bob may qualify only XYZ Co.'s license in this case. An employer must file federal Form 1099-MISC to report payments of _____ or more per calendar year to persons not treated as employees (e.g., independent contractors) for services performed for the business. A. $200 B. $300 C. $450 D. $600 ------CORRECT ANSWER---------------D. $600 How do you know if you are bidding correctly? A. You are getting all the jobs you bid on. B. The job cost is almost the same as the estimated cost. C. The job cost is substantially below the estimated cost. D. The job cost is substantially above the estimated cost. ------CORRECT ANSWER---------------B. The job cost is almost the same as the estimated cost. A contractor has been turned in to DOSH by an employee for a safety violation. The contractor wants to find out who reported the violation and asked DOSH for the employee's name. What will DOSH likely do? A. Through due-process procedures, DOSH will identify the employee, but no retaliation may be directed at the employee. B. Through due-process procedures, DOSH will identify the employee, but the employee may not be fired. C. DOSH will release the employee's name for a fee, and the contractor may deal with the employee in any way the contractor chooses. D. Unless requested otherwise, DOSH will keep confidential the name of any person making a complaint, and no retaliation may be directed at the employee if the employee's identity is discovered. ------CORRECT ANSWER---------------D. Unless requested otherwise, DOSH will keep confidential the name of any person making a complaint, and no retaliation may be directed at the employee if the employee's identity is discovered. An employer hires one part-time and two full-time employees. The full-time employees are covered by workers' compensation insurance, but not the part-time employee. Is this lawful? A. Yes: Part-time employees do not have to be covered. B. Yes: If all of the full-time employees are covered, the part-time employee does not have to be. C. Yes: If the company has less than 10 employees, part-time employees do not have to be covered. D. No: Even part-time employees must be covered. ------CORRECT ANSWER---------------D. No: Even part-time employees must be covered. If no notice of completion or cessation is given on a job, how many days does a contractor have to file a mechanics' lien after completion of work? A. 30 days B. 60 days C. 90 days D. 180 days ------CORRECT ANSWER---------------C. 90 days Who is in charge of safety at a job site? A. foreperson B. labor specialist C. contractor D. most experienced worker ------CORRECT ANSWER---------------C. contractor If a subcontractor were to serve the owner with a stop notice, the most likely reason would be to: A. inform the owner that the subcontractor has not been paid by the prime, and the owner must set aside sufficient funds to pay the subcontractor's bill B. inform the owner that the owner's property will be attached if payment is not made C. notify the owner that a lien will be filed against the property if the subcontractor is not paid D. notify the owner that the subcontractor has completed his portion of the work ------CORRECT ANSWER---------------A. inform the owner that the subcontractor has not been paid by the prime, and the owner must set aside sufficient funds to pay the subcontractor's bill In the absence of a collective bargaining agreement, two employees filed a written complaint with DOSH because of unsafe working conditions. The contractor discovered who the employees were and fired them because of the complaint. What would probably happen if the employees appealed the termination? A. Nothing: A contractor may fire any employee for any reason. B. Nothing: There is no appeals board for such cases. C. The contractor must reinstate the employees and reimburse them for lost wages and benefits. D. The contractor must reinstate the employees but is not required to reimburse them for lost wages and benefits. ------CORRECT ANSWER------ ---------C. The contractor must reinstate the employees and reimburse them for lost wages and benefits. Disabled access laws went into effect in _____ for public buildings and in _____ for private buildings. A. 1960 ... 1961 B. 1968 ... 1970 C. 1970 ... 1971 D. 1975 ... 1976 ------CORRECT ANSWER---------------B. 1968 ... 1970 For which of the following injuries does Cal/OSHA require employers to make and keep records? A. Worker is knocked unconscious but returns to work after resting for one hour. B. Worker suffers a burn that requires a one-time visit to the doctor. C. Worker develops a chronic allergy after repeated exposure to fiberglass insulation. D. All of the above. ------CORRECT ANSWER---------------C. Worker develops a chronic allergy after repeated exposure to fiberglass insulation. Which of the following is considered a fixed expense? A. office rent B. wages C. office supplies D. materials ------CORRECT ANSWER---------------A. office rent A consumer may cancel a home solicitation contract at any time prior to midnight of the _____ after the date of the transaction. A. 2nd business day B. 3rd business day C. 5th business day D. 7th calendar day ------CORRECT ANSWER---------------B. 3rd business day Star Construction moved to a new office but never filed a change-of- address form with the Registrar. Consequently, Star never received a renewal application. If Star fails to renew its license within three years of the date of expiration, Star will have to: A. pay a delinquency fee to renew license B. simply file contractor's license bond C. apply for a new license D. complete and file a delinquent license renewal form ------CORRECT ANSWER---------------A. pay a delinquency fee to renew license Of the following, who may not approve a set of plans in the State of California? A. architect B. interior designer C. engineer D. owner-builder ------CORRECT ANSWER---------------B. interior designer When calculating unemployment and disability insurance taxes, an employer would not include: A. bonuses B. severance pay C. wages D. overtime pay ------CORRECT ANSWER---------------B. severance pay If you are required to report employment taxes or give tax statements, the _____ must obtain a federal Employer Identification Number. A. employee and employer B. employee C. employer D. bookkeeper ------CORRECT ANSWER---------------C. employer Using money from a current job to pay for unrelated projects is called: A. diversion B. usury C. penury D. transmigration ------CORRECT ANSWER---------------A. diversion How should the prime contractor determine whether a subcontractor has workers' compensation insurance? A. Subcontractors do not need workers' compensation insurance. B. The prime contractor should ask to see the expiration date on the sub's certificate of insurance. C. The prime contractor should periodically call the sub's insurance agent to check on the sub's policies. D. The prime contractor should check with the Registrar's office to see if the sub is insured. ------CORRECT ANSWER---------------B. The prime contractor should ask to see the expiration date on the sub's certificate of insurance. A contractor is bidding on a project for a homeowner. The homeowner has included several "extra" items to be bid upon. After receiving the bid, the homeowner said it was too high and asked the contractor to lower the price. What should the contractor do? A. Decline the work. B. Negotiate with the homeowner to reduce the scope of the work by eliminating some of the extra items. C. Lower your bid to cost and hope to recover the overhead later. D. Lower your bid to cost and overhead only (eliminate the profit). ------ CORRECT ANSWER---------------B. Negotiate with the homeowner to reduce the scope of the work by eliminating some of the extra items. A client wants the house painted and carpet installed. What license classification(s) is/are required for this work? D. unacceptable: The actual Social Security card should have been inspected. ------CORRECT ANSWER---------------D. unacceptable: The actual Social Security card should have been inspected. What is the maximum number of exemptions an employee can put on their W-4 before you have to send the form to the IRS? A. 6 B. 8 C. 10 D. 12 ------CORRECT ANSWER---------------C. 10 You are bidding on a job with plans drawn by a homeowner. You notice that the dimensions on the plans do not add up. What should you do? A. Inform the homeowner that you cannot bid until the numbers add up. B. Tell the homeowner to consult an architect. C. Bid the job as is. You can add change orders later. D. Make the corrections yourself and bid the job. ------CORRECT ANSWER---------------A. Inform the homeowner that you cannot bid until the numbers add up. Of the following, which is usually the most difficult item to estimate? A. labor B. materials C. overhead D. profit ------CORRECT ANSWER---------------A. labor An owner is having a difficult time making progress payments on time. What should a contractor do to protect herself? A. The contractor should meet with the owner to set up a new payment schedule. B. The contractor should hire an attorney. C. The contractor should ask the owner to open an escrow account. D. The contractor should file a mechanics' lien. ------CORRECT ANSWER-- -------------C. The contractor should ask the owner to open an escrow account. Which of the following is a correct statement about budgets? A. Budgets do not require accurate books. B. Budgets do not require detailed cost information. C. The goal of a budget is to forecast expenses as accurately as possible. D. A budget should allow leeway for month-to-month variations. ------ CORRECT ANSWER---------------D. A budget should allow leeway for month-to-month variations. A licensed contractor contracts with a building owner to do a $900 improvement. When applying for a building permit, the contractor checks the owner-builder box on the declaration form. Which of the following statements is correct? A. The contractor may check the box to avoid insurance charges. B. The contractor should check the box so that the owner-builder verification will be mailed to the owner. C. The contractor may check the box because the contractor is the owner's employee. D. The contractor may not check the owner-builder box because the owner contracted for the improvement. ------CORRECT ANSWER---------------D. The contractor may not check the owner-builder box because the owner contracted for the improvement. A contractor buys a construction firm from a person who is retiring. There is an existing collective bargaining agreement with a successor clause that is good for three years. As the new owner, is the contractor bound by the collective bargaining agreement? A. No. The contractor never personally consented to the collective bargaining agreement. B. No. A successor clause in a collective bargaining agreement is not binding on a successor for more than a year. C. No. Successor clauses in collective bargaining agreements are illegal. D. Yes. A successor clause in a collective bargaining agreement is binding on a successor for up to three years. ------CORRECT ANSWER--------------- D. Yes. A successor clause in a collective bargaining agreement is binding on a successor for up to three years. If you find that work done by a previous contractor is in violation of the local building code, what should you do? A. Repair the violation immediately. B. Report the violation to the owner with an estimate for the needed repairs. C. Report the violation directly to the building department. D. The contractor may ignore the violation. ------CORRECT ANSWER-------- -------B. Report the violation to the owner with an estimate for the needed repairs. A balance sheet shows: A. revenues and expenses over an extended period of time B. assets and liabilities over an extended period of time C. assets and liabilities at a certain point in time D. revenues and expenses at a certain point in time ------CORRECT ANSWER---------------C. assets and liabilities at a certain point in time Excavators must clearly mark the boundaries of a work area, usually with _____ paint. A. 10 B. 30 C. 60 D. 90 ------CORRECT ANSWER---------------C. 60 A subcontractor must file a mechanics' lien with the: A. County Clerk B. County Recorder C. owner D. lender ------CORRECT ANSWER---------------B. County Recorder Before you build on landfill you must notify: A. government B. engineers C. architect D. government/engineers ------CORRECT ANSWER---------------D. government/engineers Who furnishes MSDS sheets? A. supplier B. Cal/OSHA C. DOSH D. contractor ------CORRECT ANSWER---------------A. supplier Which funds does the stop notice block? A. from the owner to the material supplier B. from the prime contractor to the subcontractor C. from the owner to the subcontractor D. from the owner to the prime contractor ------CORRECT ANSWER--------- ------D. from the owner to the prime contractor In the cash system of accounting, a transaction is recorded or posted: A. when cash changes hands B. when an amount is approved for payment C. when an amount is invoiced D. when cash is earned and expenses are incurred ------CORRECT ANSWER---------------A. when cash changes hands If an owner cancels a home solicitation contract on March 20, by what date must the contractor return the down payment? A. 23-Mar B. 30-Mar C. 1-Apr D. 20-Apr ------CORRECT ANSWER---------------B. 30-Mar Except in an emergency, you must notify the regional Underground Service Alert Notification Center no less than _____ nor more than _____ starting excavation work. A. 1 day before ... 14 days before B. 2 days before ... 14 days after C. 2 days before ... 14 days before D. 3 days before ... 28 days after ------CORRECT ANSWER---------------C. 2 days before ... 14 days before Your bid on a job was accepted, but you inadvertently left out a part of that job. What should you do? A. Write a change order and get it signed by the owner. B. Add the additional cost to the end of the job and say nothing about it. C. Do the omitted portion of the job on a time-and-materials basis. D. The contractor is responsible for the work. ------CORRECT ANSWER---- -----------D. The contractor is responsible for the work. The "Notice to Owner" is given to: A. inform the owner when work will begin and end B. inform the owner that you are going to improve the property C. let the owner know the property can be liened D. let the owner know a mechanics' lien has been filed against the property ------CORRECT ANSWER---------------C. let the owner know the property can be liened What is the best way to ensure that your license bond remains in effect after its expiration date (i.e., what is the best way to avoid a period of suspension)? A. Renew the bond seven days after expiration. B. Make sure the effective date of the new bond is the same as the cancellation date of the old bond. C. Make sure the effective date of the new bond is the day after the cancellation date of the old bond. D. Buy a second bond that overlaps coverage. ------CORRECT ANSWER--- ------------B. Make sure the effective date of the new bond is the same as the cancellation date of the old bond. Who is responsible for keeping track of change orders? A. owner B. foreperson C. contractor