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Contractors test > Business and Law > Flashcards

Business and Law Flashcards

1
Q

1 – The employer should get I-9 forms from employees within how many days of hire?

A

Three days

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2
Q

2 – Your Comprehensive General Liability insurance protects you from which of the below?

A

1 – Persons not employed by you
2 – Damage to property other than your company
3 – Injury to employees
4* – Both 1 and 2

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3
Q

3 – Which of the below would pay state tax on income generated?

A

Corporations

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4
Q

4 – Which of the below would not be included in a contract offer?

A

Sub-contractors

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5
Q

5 – A company must have how many employees before workers’ compensation is required?

A

Three

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6
Q

6 – Employers must pay Unemployment Insurance taxes on employees how often?

A

Quarterly

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7
Q

7 – John Smith, an employee of your firm, is paid on a two week pay period, has worked the following schedule:

A) Week 1 – Monday - Friday (8 hours each day) and 4 hours on Saturday
B) Week 2 – Monday - Wednesday (8 hours each day) Thursday worked half a day then went home with 4 hrs sick pay and Friday is a paid holiday.

What is John’s gross pay for this pay period if he is making $18.40 per hour?

A

$1,582.40

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8
Q

8 – Where will John’s wages fall on the company’s income statement?

A

Direct Cost

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9
Q

9 – If you, an owner, want to be guaranteed that your project will be completed according to the plans, specifications, terms and conditions of the contract. What kind of bond would you need?

A

Performance Bond

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10
Q

10 – John Smith inherited some money and quit his job. He was able to get his limited contractor license and has decided to build a house for him and his family. His potential cost estimate has exceeded $565,000. At this time he is waiting on his building permit so he can begin construction.
Has he proceeded?

A

Correctly - This is for his personal use and does not require a license

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11
Q

11 – Which of the statements below is correct?

A

1 – Employees should receive a w-2 before January 31 from their employer
2 – Sub-contractors should receive a 1099 before January 31 from the general contractor
3 – Both 1 and 2 are true
4 – None of the above

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12
Q

12 – What is the disadvantage of the cash method accounting versus the accrual method of accounting?

A

Cash method does not match revenue with expenses incurred

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13
Q

13 – If Federal Unemployment tax wage period ends on Saturday June 30th, when is your tax deposit to the government due?

A

July 31st

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14
Q

14 – What is the definition of Negotiation?

A

Diplomatic bargaining

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15
Q

15 – Where are the Material Safety Data Sheets (MSDS) originated from?

A

Provided by the manufacturer of the chemical

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16
Q

16 – The contract bid documents include:

A

1 – Invitation to bid
2 – Bid Instructions
3 – Bid forms
4* – All of the above

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17
Q

17 – Commercial General Liability Insurance (CGL) covers:

A

1 – Bodily injury to non-employees
2 – Damage to property not belonging to business
3 – Personal injury, slander, damage to reputation
4 – All of the above

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18
Q

18 – If you accumulate a tax liability of $100,000 or more, you must make your deposit by:

A

1 – Next banking day

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19
Q

19 – The maximum OSHA fine is:

A

$ 70,000

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20
Q

20 – How can you become more competitive in business?

A

Improve safety

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21
Q

21 – What is more likely to be included in company or general overhead?

A

Insurance

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22
Q

22 – What is the best method to accurately estimate costs of labor for a job?

A

Job cost history

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23
Q

23 – Which of the following is not an advantage of a sole proprietorship?

A

Unlimited personal liability

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24
Q

24 – One of the main reasons that a construction contract could be voided or terminated is:

A

– A material breach occurs when a party refuses to perform the contract

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25
Q

25 – Which of the following is considered to be part of company overhead?

A

1 – Bonds
2 – Accounting fees
3 – Office rent
4* – Both 2 and 3

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26
Q

26 – When an employee is voluntary or involuntarily terminated, when shall their wages be paid in full?

A

Within 48 hours or next regular payday

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27
Q

27 – LLC corporations are like an S corporation, federal income taxes are paid only on income distributed to members as ordinary income.

A

True

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28
Q

28 – What is a bond?

A

A three-party contract between the surety, contractor and owner

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29
Q

29 – How long must OSHA records be kept by an employer?

A

5 years

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30
Q

30 – Who is responsible for paying the Federal Unemployment Tax?

A

Tax is paid by employer only at a rate of 6.2 percent on first $7,000 paid to employee

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31
Q

31 – What is the terminology used for money withheld from monthly payments to a general contractor or subcontractor til after completion of a project?

A

Retainage

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32
Q

32 – The Fair Labor Standards Act (FLSA) applies to employers who have ____or more employees.

A

1

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33
Q

33 – The Fair Labor Standards Act (FLSA) provides that a federal minimum wage of not less than $ 7.25 per hour be paid. What group of people can this minimum be paid less than the federal minimum?

A

Minors under the age of 20

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34
Q

34 – Employers are required by law to furnish 2 (two) copies of form W-2 to each employee from which taxes has been withheld from the previous year before:

A

January 31

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35
Q

35 – The income statement is sometimes called the profit-and-loss statement.

A

True

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36
Q

36 – Liabilities are all debt and obligations owed by the business. Current liabilities are debts that will occur and must be paid within ____year.

A

1

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37
Q

37 – Long term liabilities are debt obligations that extend beyond ___year.

A

1

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38
Q

38 – An 11 (eleven) month note due during a fiscal year is called:

A

– Current liability

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39
Q

39 – Determine the debt ratio if company assets are $100,000 and liabilities are $50,000.

A

.50

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40
Q

40 – When a General Contractor contracts with a sub-contractor who does not have workers compensation he:

A

Is completely responsible for workers compensation

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41
Q

41 – Employers must pay matching funds for Social Security tax withheld from the employee’s check which is 6.2 percent up to $ 106,800 of gross pay. Also the employer must pay Medicare tax at 1.45 percent, what is the gross amount for Medicare tax?

A

Pay on all gross wages – there is no maximum

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42
Q

42 – The General Contractor pays a brick mason $ 1,500 for work he performed on a building. Since this amount was above the $600.00 allowed by law, the Contractor must give him which form:

A

Form 1099

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43
Q

43 – As a General Contractor you have a project superintendent that is paid $25.00 per hour and has worked 60 hours in a week. He is covered under the Fair Labor Standards Act (FLSA) as a nonexempt employee. He has worked 30 % on Project A and 50% on Project B. The remainder of his time was spent in the main office. How much of his salary should be applied to direct cost of supervision for Project B?

A

$875.00

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44
Q

Which of the following would not be a fixed asset?

A

Stocks and bonds

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45
Q

when choosing a CPA to do your accounting work, which of the below should be considered?

A

A CPA that uses generally accepted accounting practices

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46
Q

46 – If the contractor does not give the owner a written or verbal warranty, then the owner will be left with this type of warranty.

A

Implied warranty

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47
Q

47 – The time located on a CPM (Critical Path Method) chart for a specific task to the task is known as:

A

Float time

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48
Q

48 – The late start time minus the early start time on a CPM (Critical Path Method) chart is called:

A

Total float

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49
Q

Which of the following best describes working capital?

A

Current assets minus current liabilities

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50
Q

50 – A sub-contractor working for a general contractor on a state financed project has not been paid and wishes to submit a claim against the contractor’s payment bond. What is the time period for doing this?

A

120 days after last furnishing labor or materials

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51
Q

51 – Which of the following scheduling methods would be the most easier to read?

A

Calendar method

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52
Q

52 – Materials on hand that are stored on a construction project would be listed on the balance sheet under which of the below?

A

Current asset

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53
Q

53 – A contract must be written if it pertains to:

A

Real estate or land

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54
Q

54 – Which of the below would not show up on a balance sheet?

A

Revenue

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55
Q

55 – You have an office trailer on a construction project that has been used on multiple projects, which of the below would it be listed on?

A

Company overhead

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56
Q

56 – An employee is injured covered under workman’s compensation, which of the below injury would amount to the longest 2/3 weekly compensation for the employee?

A

Loss of an arm

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57
Q

57 – When you have a broken line on a CPM (Critical Path Method) schedule between two tasks, this broken line represents _____time between the two activities.

A

Slack or float

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58
Q

58 – A company has current assets of $250,000 and current liabilities of $ 180,000. Their fixed assets are $ 1,500,000 and long term debt is $750,000. Their bonding capacity is 10 times their working capital, what is their bonding capacity.

A

$700,000

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59
Q

59 – What does the letter “i” on a CPM (Critical Path Method) Schedule indicate?

A

Start of an activity

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60
Q

60 – What does the letter “j” on a CPM (Critical Path Method) Schedule indicate?

A

End of an activity

61
Q

61 – The North Carolina Employment Security Law says that all contractors are required to pay unemployment tax if:

A

1 – Have one or more employees for 20 weeks during a calendar year
2 – Pay $1,500 in wages in any calendar quarter during a calendar year
3* – Both 1 and 2
4 – Neither of the above

62
Q

62 – What is the normal warranty period for a construction project?

A

12 months

63
Q

63 – What would be the total cost of workman’s compensation insurance for a company if the main office salary was at $125,000 at $1.20 per hundred and the field salaries were $250,000 at $8.50 per hundred?

A

$22,750

64
Q

64 – How many days do you have to complete legal action in order to enforce a lien?

A

180 days

65
Q

65 – On a CPM (Critical Path Method) schedule, what is the definition of “float time”?

A

Remaining time after a task is completed until the next task begins

66
Q

66 – A company’s debt ration is .50, which of the below best describes the company’s financial position?

A

Just hobbling along

67
Q

67 – What is the most accurate estimating method?

A

Quantity take-off method

68
Q

68 – What is the quick ratio of a company with total assets of $ 150,000, liabilities of $ 35,000 and an inventory of equipment of $ 52,000?

A

2.8

69
Q

What is a fixed asset?

A

Property and equipment

70
Q

70 – What is the percentage withheld for Medicare tax?

A

1.45

71
Q

71 – A contract offer made after having modified the original offer is called what?

A

Counter offer

72
Q

72 – Who is responsible for day to day activities on a construction project?

A

Superintendent

73
Q

73 – A licensed general contractor agrees to pull a permit for an un-licensed contractor to build a project. The licensed contractor agrees to periodically supervise the project. Which of the below is true?

A

This is illegal and is subject to disciplinary action by the board

74
Q

74 – When compensating an employee for and injury, which of the loss below would the insurance company be more liable for?

A

Loss of an arm

75
Q

75 – At what age would an employer be required to obtain employment certificate to work an employee?

A

Under 18

76
Q

76 – A contractor uses the accrual method of accounting. He has a $6,000 billing for May, a $10,000 billing for June. He receives $6,000 in June payments and pays his total bills of $1,000 in May and total bills of $5,000 in June. What is his profit for June?

A

$5,000

77
Q

77 – Anne Johnson has a contractor’s license in the name of Anne Johnson Construction, Inc. Which of the below names is she allowed to work under as a general contractor?

A

Anne Johnson Construction, Inc.

78
Q

78 – Which of the items below would not show up on an income statement?

A

Cash

79
Q

79 – What is the percent withheld for Social Security and Medicare (FICA) taxes?

A

7.65 %

80
Q

80 – When you involved in a partnership and one partner is responsible for a $30,000 debt, how much of that debt is the other partner responsible for?

A

All of the debt or $30,000

81
Q

81 – How can you keep un-expected costs of materials down on a project?

A

Timely delivery schedule

82
Q

82 – If a qualifier leaves, which of the following is true?

A

The license is good for 30 days maximum after qualifier leaves but licensee can re-take the exam to become licensed

83
Q

83 – How many days do you have to notify the licensing board if your business is changing names?

A

30 Days

84
Q

84 – Which of the below is true about a partnership?

A

Must obtain a federal tax identification number

85
Q

85 – How many days does a business have to report a new hire?

A

20 Days

86
Q

86 – When are Federal Unemployment Taxes (FUTA) due?

A

the last day of next month following the ending quarter

87
Q

87 – If your Federal Unemployment Taxes are $ 5,000, when do you figure these taxes?

A

Quarterly

88
Q

88 – Once a contractor’s license expires, what is the period of time before the contractor has to repeat the license application?

A

4 Years

89
Q

89 – If there is ambiguous language in the contract that can not be clarified, then the interpretation of the contract would go against:

A

The party who wrote the contract

90
Q

90 – The ADA (Americans with Disabilities Act) applies to persons who have impairments such as:

A

Aids

91
Q

91 – This schedule should show the contractor is prepared to show working capital at anytime?

A

Cash flow schedule

92
Q

92 – What is the quick ratio (sometimes referred to the acid test ratio) for the following:

A 
Current assets 		$ 80,000
		Fixed assets		$ 112,000
		Inventory		$ 12,000
		Current liabilities	$ 30,000
		Long term liabilities	$ 86,000
		Net income		$ 57,000

1 – 2.27

93
Q

93 – When estimating work, lower markup can result in:

A

Insufficient cushion for excessive costs

94
Q

94 – A company changing its address should report the address change to the NC Licensing Board in how many days?

A

30 days

95
Q

95 – According to the FLSA (Fair Labor Standards Act) which of the below would be classified as a laborer?

A

An unskilled worker

96
Q

96 – A General Contractor with a CGL (Commercial General Liability) insurance policy of
$ 1,000 and a $ 500 deductible intentionally violates a code. During an inspection, the violation causes the owner $ 1,000 in damages. Which statement below is correct?

A

The GC is responsible for the $ 1,000

97
Q

97 – A company has the following financial information, what is the profit for the year?

A 
The below figures are just examples.
		Assets - $78,000
		Current Liabilities $15,000
		Inventory $12,000
		Long Term Liabilities $ 45,000
		Cost of Goods  $ 17,000
		Income $ 27,000
	1 - $ 10,000

Business Law and Project Management 7th Edition Page 14-5

Formula: Income – Cost of Goods = Profit
The remaining figures means nothing

98
Q

98 – All of the following are considered parts of a source document except:

A

Tax returns

99
Q

99 – Which of the following is an advantage of a Subchapter S – Corporation form of business?

A

Avoidance of double taxation

100
Q

100 – A lump sum contract on a project is $ 200,000. The retainage withheld of this project is 10%. The contract is complete to 90% and has been paid. What is left owed on the project?

A

$ 35,000 to $ 40,000

90% would be $ 180,000 less $ 18,000 retainage = $ 162,000 paid
Total contract is $ 200,000 minus $ 162,000 paid = $ 38,000 owed

101
Q

101 – What is the best definition of a bid bond?

A

1 – Guarantees if the contractor is awarded the job, will do work at submitted price

102
Q

102 – The document that shows the status of your company is:

A

Balance sheet

103
Q

103 – If an owner wishes to sign a contract with a contractor that relieves the owner of any and all responsibilities, what type of contract is this?

A

Lump sum

104
Q

104 – If the owner is one day late making payment to a contractor and he walks off the job, which of the below is true?

A

Material breach (contractor has violated a contract condition)

105
Q

105 – When two partners are financially responsible for $ 30,000, what is true?

A

Each partner is responsible for $ 30,000

106
Q

106 – Which of the below is not a key element of a contract?

A

Negotiations

107
Q

107 – If your taxes are due on Saturday June 30th, when do you have to pay them?

A

Monday, July 2nd

108
Q

108 – What is the main difference between a Bar Graph and a CPM (Critical Path Method) schedule?

A

CPM shows interaction with other events

109
Q

109 – How many employees are required before a written emergency action plan is needed?

A

11

110
Q

110 - A contractor installs a $1000.00 heat system and deliberately doesn’t install it properly. He has General Liability Insurance coverage with a $500.00 deductible with no riders. Which of the below is true?

A

– The contractor is liable for the $1000.00

111
Q

111 – Which of the below is not a part of a Source Document?

A

Tax return

112
Q

112 – What percentage of an employee’s pay must be withheld for worker’s compensation insurance?

A

0

113
Q

113 – Quarterly tax deposits may be made using Form _____ if the tax liability is less than $2,500.

A

941

114
Q

114 – If the contractor wishes to sign a contract with an owner and indemnify the owner against all damages what can the contractor do to indemnify the owner?

A

Sign a lump sum contract

115
Q

115 – Which form would you use to obtain all of the federal tax withholding for an employee?

A

Circular E: Employers Tax Guide

116
Q

116 – A contractor has a claim under his comprehensive standard general liability policy with a rider floater that has $ 1,000 deductible per occurrence. The contractor’s claim is $ 5,000 injuries to employee, $ 1,000 injury to pedestrians, $ 3,000 damage to contractor equipment and $ 3,000 for loss of project materials purchased by the contractor. What is the insurance company liable for on this claim?

A

Nothing

117
Q

117 – The following business type must pay state income tax:

A

Corporation

118
Q

118 – When do you file a 940 tax form?

A

The last day of the month following the ending quarter

119
Q

119 – Which of the below is mandatory for an employee to provide for an employee that is covered under the Fair Labor Standards Act (FLSA)?

A

Overtime pay

120
Q

120 – Federal Unemployment Taxes (FUTA) ended on October 15th, when are these taxes due?
FUTA Taxes are filed on form 940.

A

January 31st

121
Q

121 – A contractor uses the accrual method of accounting. He has a $6,000 billing for May, a $5,000 billing for June. He receives $3,000 in June payments and pays his total bills of $1,000 in May and total bills of $3,000 in June. What is his profit for June?

A

$ 2,000.00

122
Q

122 – The income statement is sometimes called:

A

Profit and loss statement

123
Q

123 – When determining estimating costs framework, where is the group labor activities placed?

A

Task

124
Q

124 – When figuring the labor cost equation, which of the below should be figured in?

A

Extra hours spent on planning and scheduling

125
Q

125 – What is the penalty for paying FUTA taxes 30 days late?

A

10 %

126
Q

126 – A company has a pick up truck that will be paid off before year end, which category will this truck fall in?

A

Current liability

127
Q

127 – There is a 50% partnership set up as an LLC doing business as (DBA). Which of the below is true?

A

Need to register business in each county

128
Q

128 – You needed to purchase special equipment that was only to be used on one project, which of the below would this be coded to?

A

Direct cost

129
Q

129 – How many bids are required on public bid jobs?

A

3

130
Q

130 – Which of the following is considered to be part of company overhead?

A

Expenses

131
Q

131 – What is the profit margin if the net income is $ 10,000.00, the liabilities are $ 5,000.00 and the assets are $ 3,000.00?

A

Not enough information given to calculate

132
Q

132 – Where is a general contractor’s license displayed?

A

Place of business

133
Q

133 – Which of the below is not a contributing factor for low profit margin?

A

Accrual method of accounting

134
Q

134 – What is the best method for determining job labor costs?

A

– Historical data

135
Q

135 – According to FLSA (Fair Labor Standards Act) how many vacation days per year are employers required to provide for their employees?

A

40 hours

136
Q

136 – What is a major advantage of a sole proprietorship ownership of a company?

A

Easier to sell

137
Q

137– When are the annual 940 tax reports due to the government?

A

By January 31

138
Q

138– Which of the below would be an annual depreciation method for an item?

A

Straight line

139
Q

139 – What is the best information tool to determine labor cost for each task?

A

Previous jobs

140
Q

140 – What is a disadvantage of an oral contract versus a written one?

A

Difficult to prove

141
Q

141 – A construction project budget tracking is based on:

A

Cost estimate

142
Q

142 – Why is it important to fully understand a contract?

A

– Prevent disputes

143
Q

143 – A scheduling bar chart shows:

A

Time line relationship

144
Q

144 – Which of the following is an advantage of a Sole Proprietorship?

A

Business owner makes all decisions

145
Q

145 – What is the current Social Security rate?

A

6.20 %

146
Q

146 – A cost plus contract is typically used when:

A

The labor costs are not specified

147
Q

147 – Which of the below is an example of an indirect cost?

A

A superintendent’s year end bonus

148
Q

148 – How long must all records for employment taxes kept?

A

4 years

Contractors test (13 decks)

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