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CSLB CONTRACTOR'S LAW &
BUSINESS EXAM 200
QUESTIONS AND ANSWERS
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"Every-employer-of-______-or-more-full-or-part-time-employees-must-keep-written-health-and-
safety-records-for-_______-years.-
-
A. 1-3-
B. 7-4-
C. 10-3-
D. 11-5---CORRECT-ANSWER=>-Every-employer-of-11-or-more-full-or-part-time-employees-must-
keep-written-health-and-safety-records-for-5-years."-
-
"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=>-Walk-the-job."-
-
"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-cashflow-problems.---CORRECT-


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,ANSWER=>-The-contractor-should-do-the-best-possible-job-of-staying-within-budget.-`"-
-
"Who-must-sign-a-joint-control-addendum-to-a-home-improvement-contract?---CORRECT-
ANSWER=>-Owner,-contractor,-and-joint-control-officer."-
-
"When-purchasing-insurance,-what-is-the-best-way-to-chose-among-different-companies?---
CORRECT-ANSWER=>-Cost-and-Coverage"-
-
"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?--
-
A. Walk-the-job-site-with-the-owner.-
B. Review-the-plans-and-specifications-with-the-owner.-
C. Show-the-owner-the-critical-path-schedule.-
D. Include-a-payment-schedule-in-the-contract-and-review-other-details-of-the-contract-with-the-
owner.---CORRECT-ANSWER=>-Review-the-plans-and-specifications-with-the-owner."-
-
"When-an-owner-signs-a-receipt-for-a-stop-notice,-it-usually-means-the-owner:---CORRECT-
ANSWER=>-The-owner-recognizes-that-a-lien-could-be-placed-on-funds."-
-
"To-whom-do-you-report-and-pay-sales-tax?---CORRECT-ANSWER=>-The-Board-of-Equalization"-
-
"DOSH-must-investigate-a-complaint-charging-a-serious-violation-of-health-or-safety-standards-
within:---CORRECT-ANSWER=>-DOSH-must-investigate-a-complaint-charging-a-serious-violation-of-
health-or-safety-standards-within-two-working-days."-
-
"By-law,-a-"hard-laborer"-may-not-be-younger-than-______-years-old.---CORRECT-ANSWER=>-A-
hard-laborer-may-not-be-younger-than-16-years-old."-
-
"When-is-the-last-day-a-customer-can-cancel-a-contract-that-was-signed-on-Friday,-December-
21st?---CORRECT-ANSWER=>-The-following-Wednesday.-
-
The-customer-has-the-right-to-cancel-3-business-days-after-the-day-the-contract-has-been-signed-
and-delivered-to-the.-In-this-case:-Saturday-Midnight-day-one.-Monday-midnight-day-two-
Wednesday-Midnight-day-three.-NOTE:-Sunday-and-Tuesday-were-not-business-days-since-
Tuesday-was-a-holiday.-Correct-answer-is-Wednesday-midnight."-
-
"When-a-notice-of-completion-has-been-filed,-the-original-contractor-has-how-many-days-to-
record-a-lien.---CORRECT-ANSWER=>-60-days-to-record-a-lien."-
-
"Which-of-the-following-financial-ratios-is-the-strictest-measure-of-liquidity?-
-


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, A. Quick-Ratio-
B. Current-Ratio-
C. Profitability-Ratio-
D. Leverage-Ratio---CORRECT-ANSWER=>-The-quick-ratio-is-the-strictest-measure-of-liquidity."-
-
"When-should-you-let-your-attorney-see-a-construction-contract?---CORRECT-ANSWER=>-After-the-
contract-is-prepared-but-before-it-is-signed."-
-
"How-often-are-FICA-taxes-reported-and-paid?---CORRECT-ANSWER=>-Quarterly"-
-
"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=>-Business-records-must-be-kept-for-5-years."-
-
"Funds-withheld-to-guarantee-completion-of-a-project-and-correction-of-defects-are-called-a(n):---
CORRECT-ANSWER=>-Retention"-
-
"Direct-costs-are-$37,000,-overhead-is-12%-and-profit-is-5%.-What-is-the-selling-price?---CORRECT-
ANSWER=>-$44,578.31-
-
Add-the-12%-overhead-and-5%-profit-together,-then-subtract-that-from-100%-(83%).-Then-divide-
the-total-direct-cost-($37,000)-by-the-remaining-percentage-(83%)-=-445.7831."-
-
"A-mechanics'-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?---CORRECT-ANSWER=>-Find-out-the-name-of-the-
legal-owner-of-the-property-as-well-as-the-percent-of-ownership.-
-
A-mechanics'-lien.-
Step-1:-Obtain-the-exact-legal-description-of-the-property.-Step-2:-Find-out-the-name-of-the-legal-
owner-of-the-property-as-well-as-the-percent-of-ownership.--
Step-3:-Find-out-if-the-person-requesting-the-work-of-improvement-is-the-owner."-
-
"What-happens-after-an-employee's-taxable-wages-exceed-$7,000?---CORRECT-ANSWER=>-After-
$7,000,-the-employer-does-not-pay-FUTA."-
-


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