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Nevada Contractor General Business and Law (CMS)
Exam Actual Test Questions and Correct Answers With
Rationales LATEST THIS YEAR
Summarized Exam Coverage Outline
The Nevada Contractor Management Survey (CMS) Exam is a 120-minute, open-book exam with 60
questions requiring a 75% passing score . The exam is based on NRS Chapter 624 (Contractors) and NAC
Chapter 624, along with general construction business management principles .
1. Nevada Licensing Law (NRS 624 & NAC 624) - Approximately 25-30%
• Board Authority & Structure: The Nevada State Contractors Board (NSCB) is established under
NRS 624; its powers include investigation, discipline, and regulation of contractors .
• License Classifications: A (General Engineering), B (General Building), AB (Combined), and C-1
through C-42 (Specialty trades such as electrical, plumbing, carpentry) .
• Application & Qualifiers: Requirements for Responsible Managing Employee (RME) or
Responsible Managing Officer (RMO); RME must hold a valid license for the classification .
• Monetary Limits: The Board limits the maximum contract amount a licensee may undertake
based on financial statement review .
• Exemptions: "Handyman" exemption (NRS 624.031) for jobs under $1,000 total cost; federal
government work exemptions .
2. Contract Administration & Liens - Approximately 20-25%
• Written Contracts: Required for residential work; must include license number, scope, payment
schedule, start/completion dates, and required disclosures .
• Change Orders: Must be in writing and signed by all parties (NRS 624.3013) .
• Mechanic's Liens (NRS 108): Notice of Intent to Lien required within 30 days of first furnishing
labor/materials; lien filing deadline is 60 days after last furnishing .
• Required Disclosures: Notice to Owner (NAC 624.693) and Residential Construction Recovery
Fund disclosure (NRS 624.520) .
3. Financial Management & Accounting - Approximately 15%
• Accounting Methods: Cash basis vs. accrual accounting; retainage recorded as liability .
• Financial Statements: Balance sheet (assets = liabilities + equity); income statement; current
ratio (current assets/current liabilities) measures liquidity .
• Estimating & Bidding: Direct costs (labor, materials) vs. indirect costs (overhead, insurance,
bond); unit pricing .
4. Tax, Insurance & Bonding - Approximately 10-15%
• Surety Bonds: Minimum $15,000 bond for Class B (General Building) contractors .
• Nevada Modified Business Tax (MBT): Payroll-based tax paid to Nevada Department of
Taxation .
• Workers' Compensation: Administered by Nevada Department of Labor and Industrial Relations
(DLIR); required for all employees .
• Federal Payroll Taxes: Form 941 (quarterly), Form I-9 (employment verification) .
5. Labor Law & Personnel - Approximately 10%
• Independent Contractor vs. Employee: Control test; misclassification penalties .
• OSHA Requirements: 10-hour construction safety training; Form 300 (injury log) for employers
with 10+ employees .
• Nevada Labor Laws: Wage payment; prevailing wage on public works.
6. Project Management & Risk Management - Approximately 10-15%
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• Scheduling: Critical path method; progress payments tied to milestones.
• Safety: Job site safety requirements; fall protection; trenching/shoring .
• Environmental: Asbestos abatement limits for non-specialty contractors (NAC 624.585) .
7. Ethics & Disciplinary Actions - Approximately 5%
• Grounds for Discipline: Filing invalid liens, exceeding license scope or monetary limit, failure to
complete contract, diversion of funds .
• Advertising Requirements: License number must appear on all ads, vehicles (1.5-inch
minimum), business cards, website .
• Address Change Notification: Must notify NSCB in writing within 30 days .
200 Scenario-Based MCQs (Exam-Relevant)
Domain 1: Nevada Licensing Law (NRS 624 & NAC 624)
1. Which Nevada statute establishes the Nevada State Contractors Board (NSCB) and outlines its
authority to regulate contractors?
A. NRS 108
B. NRS 624
C. NRS 617
D. NRS 631
Answer: B
Rationale: NRS Chapter 624 (Contractors) is the primary statute that creates the Nevada State
Contractors Board and defines its powers, including licensing, discipline, and enforcement .
2. A contractor wishes to add a new classification to an existing license. What must be submitted to the
NSCB?
A. A new application for a separate license
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B. A change-of-classification form with proof of experience and bonding for the new work type
C. Only a written request to the Board's clerk
D. No filing required; the contractor may self-declare the new classification
Answer: B
Rationale: Adding a classification requires a formal change-of-classification filing with the NSCB,
including documentation of experience in that classification and the required bond for the new work
type .
3. Under Nevada law, the "Responsible Managing Employee" (RME) for a licensed contractor must be:
A. The owner of the company
B. An employee who holds a valid Nevada contractor's license for the classification being performed
C. Any employee with at least two years of experience in construction
D. A subcontractor hired for a specific project
Answer: B
Rationale: The RME must hold the appropriate Nevada contractor's license for the classification the
company performs and must be designated on the license as the qualifying individual .
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4. What is the minimum surety bond required for a Class B (General Building) contractor in Nevada?
A. $5,000
B. $10,000
C. $15,000
D. $20,000
Answer: C
Rationale: Nevada statutes set the minimum surety bond for a Class B (General Building) contractor at
$15,000 to ensure financial responsibility and protect consumers .
5. A contractor's license renewal in Nevada must be completed:
A. Every six months
B. Annually, by the end of the renewal month indicated on the license
C. Every two years, with a fee waiver for first-time renewals
D. Only when the contractor changes address or classification
Answer: B
Rationale: Nevada contractor licenses are renewed annually, and the renewal must be filed before the
expiration date shown on the license to remain active .
Nevada Contractor General Business and Law (CMS)
Exam Actual Test Questions and Correct Answers With
Rationales LATEST THIS YEAR
Summarized Exam Coverage Outline
The Nevada Contractor Management Survey (CMS) Exam is a 120-minute, open-book exam with 60
questions requiring a 75% passing score . The exam is based on NRS Chapter 624 (Contractors) and NAC
Chapter 624, along with general construction business management principles .
1. Nevada Licensing Law (NRS 624 & NAC 624) - Approximately 25-30%
• Board Authority & Structure: The Nevada State Contractors Board (NSCB) is established under
NRS 624; its powers include investigation, discipline, and regulation of contractors .
• License Classifications: A (General Engineering), B (General Building), AB (Combined), and C-1
through C-42 (Specialty trades such as electrical, plumbing, carpentry) .
• Application & Qualifiers: Requirements for Responsible Managing Employee (RME) or
Responsible Managing Officer (RMO); RME must hold a valid license for the classification .
• Monetary Limits: The Board limits the maximum contract amount a licensee may undertake
based on financial statement review .
• Exemptions: "Handyman" exemption (NRS 624.031) for jobs under $1,000 total cost; federal
government work exemptions .
2. Contract Administration & Liens - Approximately 20-25%
• Written Contracts: Required for residential work; must include license number, scope, payment
schedule, start/completion dates, and required disclosures .
• Change Orders: Must be in writing and signed by all parties (NRS 624.3013) .
• Mechanic's Liens (NRS 108): Notice of Intent to Lien required within 30 days of first furnishing
labor/materials; lien filing deadline is 60 days after last furnishing .
• Required Disclosures: Notice to Owner (NAC 624.693) and Residential Construction Recovery
Fund disclosure (NRS 624.520) .
3. Financial Management & Accounting - Approximately 15%
• Accounting Methods: Cash basis vs. accrual accounting; retainage recorded as liability .
• Financial Statements: Balance sheet (assets = liabilities + equity); income statement; current
ratio (current assets/current liabilities) measures liquidity .
• Estimating & Bidding: Direct costs (labor, materials) vs. indirect costs (overhead, insurance,
bond); unit pricing .
4. Tax, Insurance & Bonding - Approximately 10-15%
• Surety Bonds: Minimum $15,000 bond for Class B (General Building) contractors .
• Nevada Modified Business Tax (MBT): Payroll-based tax paid to Nevada Department of
Taxation .
• Workers' Compensation: Administered by Nevada Department of Labor and Industrial Relations
(DLIR); required for all employees .
• Federal Payroll Taxes: Form 941 (quarterly), Form I-9 (employment verification) .
5. Labor Law & Personnel - Approximately 10%
• Independent Contractor vs. Employee: Control test; misclassification penalties .
• OSHA Requirements: 10-hour construction safety training; Form 300 (injury log) for employers
with 10+ employees .
• Nevada Labor Laws: Wage payment; prevailing wage on public works.
6. Project Management & Risk Management - Approximately 10-15%
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• Scheduling: Critical path method; progress payments tied to milestones.
• Safety: Job site safety requirements; fall protection; trenching/shoring .
• Environmental: Asbestos abatement limits for non-specialty contractors (NAC 624.585) .
7. Ethics & Disciplinary Actions - Approximately 5%
• Grounds for Discipline: Filing invalid liens, exceeding license scope or monetary limit, failure to
complete contract, diversion of funds .
• Advertising Requirements: License number must appear on all ads, vehicles (1.5-inch
minimum), business cards, website .
• Address Change Notification: Must notify NSCB in writing within 30 days .
200 Scenario-Based MCQs (Exam-Relevant)
Domain 1: Nevada Licensing Law (NRS 624 & NAC 624)
1. Which Nevada statute establishes the Nevada State Contractors Board (NSCB) and outlines its
authority to regulate contractors?
A. NRS 108
B. NRS 624
C. NRS 617
D. NRS 631
Answer: B
Rationale: NRS Chapter 624 (Contractors) is the primary statute that creates the Nevada State
Contractors Board and defines its powers, including licensing, discipline, and enforcement .
2. A contractor wishes to add a new classification to an existing license. What must be submitted to the
NSCB?
A. A new application for a separate license
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B. A change-of-classification form with proof of experience and bonding for the new work type
C. Only a written request to the Board's clerk
D. No filing required; the contractor may self-declare the new classification
Answer: B
Rationale: Adding a classification requires a formal change-of-classification filing with the NSCB,
including documentation of experience in that classification and the required bond for the new work
type .
3. Under Nevada law, the "Responsible Managing Employee" (RME) for a licensed contractor must be:
A. The owner of the company
B. An employee who holds a valid Nevada contractor's license for the classification being performed
C. Any employee with at least two years of experience in construction
D. A subcontractor hired for a specific project
Answer: B
Rationale: The RME must hold the appropriate Nevada contractor's license for the classification the
company performs and must be designated on the license as the qualifying individual .
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4. What is the minimum surety bond required for a Class B (General Building) contractor in Nevada?
A. $5,000
B. $10,000
C. $15,000
D. $20,000
Answer: C
Rationale: Nevada statutes set the minimum surety bond for a Class B (General Building) contractor at
$15,000 to ensure financial responsibility and protect consumers .
5. A contractor's license renewal in Nevada must be completed:
A. Every six months
B. Annually, by the end of the renewal month indicated on the license
C. Every two years, with a fee waiver for first-time renewals
D. Only when the contractor changes address or classification
Answer: B
Rationale: Nevada contractor licenses are renewed annually, and the renewal must be filed before the
expiration date shown on the license to remain active .
