Law Test 1 Flashcards by Trevor Horner

If you notice that the plans do not specify a fireproof door but you know that one is required, you should:
a) Report it to the architect immediately
b) Talk to the owner as soon as possible
c) Quickly fix it yourself
d) Install the fireproof door and bill the client

a) Report it to the architect immediately

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What is NOT required on a Home Improvement Contract?
a) A statement that the owner can require a Performance and Payment Bond, a notice, in at least 10 point print, in close proximity to the signature
b) A list of all personnel’s name and home address that is listed on the license
c) The approximate date of when the work is to begin and when it will be substantially
completed
d) A description of the work that will be done, the materials used or installed and the equipment used or installed

b) A list of all personnel’s name and home address that is listed on the license

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3) What statement is true regarding home improvement sales people?
a) They can only work for one contractor at a time and they must register with the Register’s office
b) Any person that sells home improvement contracts for a licensed contractor outside of the contractor’s normal place of business is required to register with the Attorney General’s office
c) There is not a residency or educational requirement but they must be at least 18 years of age
d) After they have filled out the application and paid the required fees, then they can start negotiating home contracts.

c) There is not a residency or educational requirement but they must be at least 18 years of age

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4) What type of contract can a consumer cancel?
a) A sub contract
b) A home solicitation contract that involves work that includes carpentry, fencing, texture coating and burglar alarms
c) A prime construction contract
d) When a home improvement contract involves free standing bookcases, rugs and window air conditioners

b) A home solicitation contract that involves work that includes carpentry, fencing, texture coating and burglar alarms

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What date must a contractor return a down payment, if the owner cancels a home solicitation contract on March 20th?
a) April 23rd
b) March 30th
c) April 1st
d) April 20th

b) March 30th

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When a contractor and an owner contract for an “emergency job” to be done and the materials are purchased, who is responsible for the materials if the owner cancels the contract?
a) The owner is
b) The contractor is
c) The supplier is
d) No one is

a) The owner is

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A joint-control addendum to a Home Improvement Contract, must be signed by whom?
a) The contractors only
b) The owner and contractor
c) The owner, contractor and a Notary Public
d) The owner, contractor and the joint control officer

d) The owner, contractor and the joint control officer

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What statement is true concerning Surety Bonds?
a) In order to obtain a contractor’s license a Surety Bond is required
b) The Surety Bond for all contractors is valued at $7,500
c) If a contractor accidentally damages the customer’s property, a surety bond is required to cover the damage
d) All of the above

a) In order to obtain a contractor’s license a Surety Bond is required

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Who is NOT eligible to receive benefits from a Contractor’s License Bond?
a) A customer that was defrauded by the contractor
b) A subcontractor that is involved in an accident on a job site
c) All employees that were not paid wages that were due
d) A homeowner that has a valid claim when the contractor abandons the job

b) A subcontractor that is involved in an accident on a job site

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What bond matches with what it does?
a) A Performance Bond guarantees that the project is completed according to the plans and the specs
b) A Payment Bond guarantees the payments for all labor and material costs
c) A Contract Bond guarantees both job completion and payments for all labor and materials
d) All of the above are true

d) All of the above are true

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What alternative to filling a license bond would NOT be accepted by the Contractor License Board?
a) A cash deposit
b) A certificate of deposit
c) U.S. Government bearer-bonds
d) Blue-chip stocks

d) Blue-chip stocks

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To obtain a Surety Bond, where would a contractor obtain one?
a) A bank
b) A credit union
c) An insurance agent
d) The Contractors State License Board

c) An insurance agent

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What is the best way to avoid a period of suspension and ensure that your license bond remains in effect after its expiration date?
a) Renew the bond 7 days after it expires
b) The new bond date should be the same as the cancelled bond date
c) The new bond date should be after the cancelled bond date
d) Buy a second bond that will overlap coverage

b) The new bond date should be the same as the cancelled bond date

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What individuals below would be required to obtain a contractor’s license?
a) A mill worker that constructs cabinets
b) A civil service repairman
c) An individual that installs, repairs or monitors a fire alarm system
d) A pool supply company

c) An individual that installs, repairs or monitors a fire alarm system

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What license(s) is/are required when a client wants their house painted and carpet installed?
a) painting, flooring and general building
b) painting, flooring
c) general building
d) painting

b) painting, flooring

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When should a contractor show their proof of licensure?
a) If a contractor sends advertisements in the mail, must show proof of licensure
b) In every county or city when they are pulling permits
c) Anytime an inspector or other government official asks for proof
d) When you go to a customer’s house show them your license

b) In every county or city when they are pulling permits

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To renew your contractor’s license, what is not required?
a) Verify that your bond is current and on file with the Contractors State License Board
b) Return the renewal notice along with the appropriate fees
c) If you have employees, notify the Registrar’s office of the name of your worker’s compensation insurance Company
d) To repeat the asbestos open-book exam

d) To repeat the asbestos open-book exam

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How many hours or what percentage must a qualifying RME for a construction firm work?
a) 32 hours per week or 80% of the work week
b) 30 hours per week or 70% of the work week c) 24 hours per week or 65% of the work week d) 12 hours per week or 51% of the work week

a) 32 hours per week or 80% of the work week

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If a person wants to qualify for more than one active license at a time, according to the Contractor’s License Law, they must own at least________ of the equity for each business where they serve as the qualifying individual.
a) 5%
b) 20%
c) 50%
d) 100%

b) 20%

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The “Notice to Owner” must be included where by the contractor?
a) In all home improvement contracts
b) On all home improvements contracts over $500
c) In all contracts for government projects
d) In all home solicitation contracts only

b) On all home improvements contracts over $500

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Who will be the least affected by the Notice to Owner?
a) The owner would be
b) The lender would be
c) The sub-contractor’s would be
d) The employee’s of the prime would be

b) The lender would be

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Regarding the Preliminary Notice, which of the following is not true?
a) Notice on all jobs must be used by all sub-contractor’s
b) The owner, prime and lender are all sent a copy of the Notice
c) The sub-contractor’s portion of the job in dollars, must be included on the Notice
d) The Notice only needs to be used when the jobs are in excess $1,000

d) The Notice only needs to be used when the jobs are in excess $1,000

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Who can’t file a Mechanics’ Lien?
a) A person that is an unlicensed contractor that has done a job for $500
b) A general contractor that has wage earners
c) Subcontractors and material suppliers
d) All contractors can file a lien

a) A person that is an unlicensed contractor that has done a job for $500

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When a customer has a contract with a contractor to build a home, when does the licensed contractor have lien rights?
a) When the rights are explained to the customer upfront
b) Only when the rights are printed on the contract
c) When the contractor has finished the job
d) The contractor automatically has lien rights

d) The contractor automatically has lien rights

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The most likely reason that a subcontractor would serve the owner with a stop notice, would be? a) To inform the owner that a sub has not been paid by the prime b) To inform the owner that the property will be liened c) To notify the owner that a lien will be filed d) To notify the owner that the sub has completed their part of the job

a) To inform the owner that a sub has not been paid by the prime

After the job was completed, the owner refuses to make the final payment to the contractor because the owner wants changes to be made. The contractor sues the owner for the amount that he owes him. What could the contractor have done to prevent the lawsuit? a) The contractor could ask the workers to testify. b) The contractor could have had the owner walk the job with him and have the owner sign a job completion form. c) The contractor could have just had the owner walk the job with him. d) All of the above.

b) The contractor could have had the owner walk the job with him and have the owner sign a job completion form.

On a private home construction job and a Stop Notice is given on the home to the lender, what should the bond amount be? a) 1-1/4 times the amount of the actual claim b) 10% of the amount of the claim c) $ 7,500 d) 1-1/2 times the amount of the actual claim

a) 1-1/4 times the amount of the actual claim

Safety procedures should be provided to employees when? a) When any new employees are hired. b) Every month to the supervisor. c) When Cal/OSHA has updated the procedures. d) None of the above.

a) When any new employees are hired.

Why would a contractor need to visit the work site frequently? a) To know when a final payment should be scheduled. b) To inform the subcontractors of the job's progress and to verify what materials must be ordered for the next phase of construction on the job. c) To determine when to schedule float time. d) To calculate the approximate final costs on the job.

b) To inform the subcontractors of the job's progress and to verify what materials must be ordered for the next phase of construction on the job.

How can a new employee learn about the safety record of a company? a) The employer must post a summary record of job-related injuries and illnesses once a year. b) View a Cal/OSHA safety video tape. c) Call the Cal/OSHA consultant services. d) None of the above.

a) The employer must post a summary record of job-related injuries and illnesses once a year.

In order to pass a job evaluation, what information does an employees need? a) The results of a health examination. b) How to safely use tools on the job site. c) How to perform CPR. d) They must have a detailed job description.

d) They must have a detailed job description.

What should you try If you are not getting jobs because your bids are too high: a) to use a standard 10% overhead figure b) to lower your fixed expenses c) to hire lower wage employees d) to work for time and materials jobs

b) to lower your fixed expenses

What would a contractor not be able to determine without going to the job site? a) the location of the electrical source b) the measurements of the walls and ceiling c) the materials that are needed d) what subcontractors to use for the job

a) the location of the electrical source

Records of accidents and injuries that have happened are kept: a) for the benefit of employees exclusively b) to help the contractor determine the causes of accidents and injuries c) to show the insurance adjuster d) to show your clients that you are responsible

b) to help the contractor determine the causes of accidents and injuries

What would be a relatively simple way to figure overhead and profit (OH&P) for a bid? a) to use the industry standard b) to average the OH&P on jobs for the previous month c) to review OH&P and contracts for the past year d) to check the profit and loss (P&L) statements for jobs of similar size

d) to check the profit and loss (P&L) statements for jobs of similar size

You and the owner sign a contract that includes fixing the hinges of a door. After finishing the work, the owner then complains that you did not remove the dog scratches from the door's finish. What would be the best way to avoid a dispute or lawsuit? a) Review the contract and specifications line-by-line with the owner and be very specific about what work is to be done. b) Write a change order for everything the owner wants done that is not in the original contract. c) Schedule a meeting with the owner, at the job-site if possible. d) Hire an attorney to explain to the owner the job description for work to be done.

a) Review the contract and specifications line-by-line with the owner and be very specific about what work is to be done.

Whose responsibility is it for having the job ready for the inspector? a) The contractor b) The owner c) The architect d) The foreman's best friend

a) The contractor

Fixed costs are applied to which of the following categories? a) overhead expenses b) direct costs expense c) travel expenses d) labor expenses

a) overhead expenses

What would be the best way to make an efficient schedule on a large job? a) A bar chart b) A critical path method (CPM) c) To follow your punch list d) Any of the above

b) A critical path method (CPM)

How could a cash flow problem best be prevented? a) The contract should specify 10% down and 80% along the way with a 10% retention. b) Every payment should relate to a definite stage of the project. c) The owner should pay in full at the start of the job. d) The owner should pay 50% of total contract at start of the job.

b) Every payment should relate to a definite stage of the project.

If a corporation provided $600 in services as an independent contractor during the calendar year, is a Form 1099-MISC required? a) Yes. b) No. It is not required unless an independent contractor is paid over $1,000 in a calendar year. c) No. It is not required for a corporation. d) Yes. It is required for individuals and corporations.

c) No. It is not required for a corporation.

What would be the minimum fine for unlawful asbestos removal is: a) $1,000 b) $3,000 c) $5,000 d) $7,000

a) $1,000

If an employee who is not hired for a specified period quits, the employee must be paid: a) within 5 days of quitting the job b) immediately when the employee quits c) half immediately after quitting with the balance due within 30 days d) never

b) immediately when the employee quits

Which government agency would you contact when changing the location of a driveway on private property? a) The state b) The local building department c) The county d) The national

b) The local building department

The purpose of a specification sheet that is attached to a set of plans is to a) show a certain detail on the plans. b) let the contractor know what has to be done on the project. c) show what materials need to be used on the project. d) show the specific dates of completion.

b) let the contractor know what has to be done on the project.

Where must the supplier's MSDS sheets be posted? a) on the job site b) at the contractors office c) they should be thrown away d) in the file cabinet

a) on the job site

Which of the following is least important in preparing a bid for a home construction project? a) The cost of permits b) The cost of materials c) The cost of labor d) The overhead and profit

a) The cost of permits

Which of the following safety equipment must be worn when you are spraying toxic materials? a) A hooded suit b) A respirator specifically designed for that material c) A pair of safety goggles d) none, because toxic materials should never be sprayed

b) A respirator specifically designed for that material

Which of the following statements is a true about payroll taxes? a) All wages are subject to taxation. b) Bartered goods are not subject to payroll taxes. c) Bonuses are not subject to payroll taxes. d) Payroll taxes must be paid once a year.

a) All wages are subject to taxation.

Form I-9 must be completed by all employees, including U.S. citizens. When must an employer complete form I-9? a) when a person applies for the job b) the first day the person starts work c) within 3 business days of the date of hire of an employee d) within 30 business days of the date of hire of an employee

c) within 3 business days of the date of hire of an employee

What is the maximum number of hours that a minor can work on the day before a school day? a) 6 hours b) 7 hours c) 8 hours d) 9 hours

c) 8 hours

When is the best time to talk to a client about liens and stop notices? a) before the contractor starts the job b) 10 days after the contractor starts the job c) 20 days after the contractor starts the job d) 30 days after the contractor starts the job

a) before the contractor starts the job

Which of the following statements would be true, if your workers’ comp insurance lapsed two weeks ago, you mailed the check yesterday, and today one of your employees was injured on the job? a) You would be covered because you mailed a check. b) You would be covered because the injury occurred within 30 days of the lapse of coverage. c) You would not be covered because the policy lapsed. d) You would not be covered because the injury occurred after the two-week grace period.

c) You would not be covered because the policy lapsed.

What must a licensed plumbing contractor, an electrical sign contractor, and well drilling contractors have displayed on both sides of their commercial vehicles? a) The name, business address, phone number, and contractor's license number b) The name, business address, and contractor's license number c) The name and contractor's license number only d) nothing

b) The name, business address, and contractor's license number

What would qualify a person as an ''independent contractor''? a) The person can make a profit or loss on work b) The person doesn't punch a time clock c) The person works at home d) The person only works on small jobs

a) The person can make a profit or loss on work

All bills are sent out once a month for a construction company. Where should the company file it’s copy of each bill? a) The accounts payable files b) The notes payable files c) The operating profit files d) The accounts receivable files

d) The accounts receivable files

When lifting heavy materials, what muscles should be used more? a) The back b) The arms c) The legs d) The shoulders

c) The legs

Which one of the following statements about the State safety code is correct? a) It is a code that adopts portions of local codes. b) It is a code that adopts all local codes. c) It is a code that has been stable for several years. d) It is the only code that you must consult.

c) It is a code that has been stable for several years.

What must be included in a home improvement contract? a) The project name b) The schedule of payments c) The job specifications d) The exact dates of job duration

b) The schedule of payments

A time card includes the day and hours the person worked, and it also includes: a) the hourly wage amount b) the location of the job site c) the date of birth for the employees d) a description of the work performed

d) a description of the work performed

Where can the workers find the name of the employer's current workers' compensation insurance carrier? a) On a notice that must be posted conspicuously in a location frequented by employees. b) On the notice printed on every paycheck. c) Can only be obtained if the employer chooses to disclose the name of the carrier. d) By telephoning the employer's insurance agent.

a) On a notice that must be posted conspicuously in a location frequented by employees.

A Notice to an Owner is for the protection of: a) the owner. b) the contractor. c) the contractor's employees. d) all of the above.

a) the owner

If a contractor fails to pay the workers, they can place a lien on the 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? a) The rest of the job might not get completed b) The owner might still legally owe the workers their wages c) The house can be sold by a sheriff to pay the workers their wages d) all of the above

d) all of the above

Employees working on Sunday are normally paid: a) regular time if it is within the 40 hours b) time and a half if it is over 40 hours c) double time d) triple time

a) regular time if it is within the 40 hours

If you want to be represented by an attorney (lawyer) in a Small Claims Court: a) the attorney must keep quiet except when consulting. b) you will be limited to one attorney. c) you cannot consult with attorney in a Small Claims Court. d) the attorney is limited to 10 minutes of bench time in the Small Claims Court.

c) you cannot consult with attorney in a Small Claims Court.

How many employees must an employer have before disability insurance deductions must be made? a) 0 b) 1 or more c) 2 or more d) 3 or more

b) 1 or more

What kind of information would tell you if you are able to pay off your bills? a) The net working capital b) The net current assets c) The current liability d) The income statement

a) The net working capital

What is the maximum penalty for a contractor that is convicted of price-gouging during a declared state of emergency? a) A permanent license revocation by CSLB b) A $10,000 fine c) A I year in jail sentence d) all of the above

d) all of the above

Which of the following components of a bid would be considered to be nonproductive? a) Equipment that is purchased for a job b) Surface preparation for painting c) Allowance for breakfast and lunch at a remote job site d) Travel time

c) Allowance for breakfast and lunch at a remote job site

A payment bond guarantees that the bonding company will pay all valid claims for unpaid bills owed by: a) the prime contractor or the property owner b) the prime contractor or the subcontractor c) the subcontractor or the material supplier d) the property owner or the material supplier

a) the prime contractor or the property owner

A home improvement salesperson's registration must be renewed when: a) for every job. b) once per year. c) every two years. d) every four years.

c) every two years.

After receiving a progress payment, the prime contractor must pay the subcontractor within how many days of the payment? a) 6 days b) 10 days c) 15 days d) 20 days

b) 10 days

Who can benefit from a mechanics' lien? a) The manufacturers of construction materials and subcontractors b) The manufacturers of construction materials and clients c) The clients and subcontractors d) The architects and subcontractors

d) The architects and subcontractors

A general contractor with a general building license wants to form a corporation with two specialty contractors. One contractor has a C-10 license and the other contractor has a C- 36. The new corporation should: a) be licensed in the general building classification. b) be licensed in the C-10 and C-36 classifications. c) be licensed in all three license classifications d) obtain a special license from the CSLB.

c) be licensed in all three license classifications

A licensed contractor wants to work with a person who is not licensed. Which is a legal alternative? a) They could work as partners if the licensed contractor signs all of the contracts. b) They should apply for a sole proprietorship contractor's license. c) They could form a corporation and obtain a corporate contractor's license. d) They could obtain a joint venture contractor's license.

c) They could form a corporation and obtain a corporate contractor's license.

Which of the following jobs does would not require a contractor's license? a) Building a six-foot high fence b) Construction of an oil derrick c) Painting the interior or exterior of a building d) Installing a French door

b) Construction of an oil derrick

Which is the best way for a newly licensed contractor to get start-up capital that he needs in order to begin business? a) Obtain a loan from private investors who will own equity in his business b) Obtain from his bank, a conventional loan that he can make monthly payments on c) He could borrow money from his relatives and friends d) None of the above. He should avoid all debt during his first year of business

b) Obtain from his bank, a conventional loan that he can make monthly payments on

What statement below is the most important to a bank that is reviewing your application for a short-term loan? a) Ratio of sales to your prior year’s sales b) Your percentage of profit c) A current ratio and/or quick ratio d) All of the above

c) A current ratio and/or quick ratio

Which expense would be the least appropriate for a contractor to seek a short-term loan for? a) Monthly rent for office space b) A bid deposit c) Payroll expenses d) Material costs

a) Monthly rent for office space

If a contractor wants to take out a loan to pay for a truck, he should obtain a(n): a) Short-term loan to be paid back within one year b) Intermediate term loan to be paid in 1 – 7 years c) Long-term loan to be paid in more than 7 years d) A loan financed for as long as the bank permits

b) Intermediate term loan to be paid in 1 – 7 years

What is the best method of bookkeeping for a construction company? a) Record the expenses when they occur and not when they are paid for, also record your income when you have earned it. b) Record the expenses when you pay them and record your income when you receive it. c) An accrual method recognized cash received but not earned, as a liability and not as income d) None of these is correct

a) Record the expenses when they occur and not when they are paid for, also record your income when you have earned it.

In bookkeeping, when a discrepancy emerges between debits and credits of approximately $9.32, what should the bookkeeper do to correct the discrepancy? a) Make up the difference by taking the money out of pocket b) No matter how long it takes you, find the error c) Take the money out of the petty cash fund d) Report the$9.32 on a special line at the bottom of the page showing the difference, providing it doesn’t represent more than 1%

b) No matter how long it takes you, find the error

Since contractors deal with numerous forms, files and reports, what is the minimum length of time that a contractor should keep a building report in the files? a) For 2 years b) For 5 years c) For not less than 3 years d) For 10 years

b) For 5 years

At month end, data is posted from the bookkeeping journals to the: a) Payment Journal b) General Ledger c) Receipts Journal d) General Journal

b) General Ledger

Which one of the following represents a current asset? a) Accounts Payable b) Retained Earnings c) Retentions d) Accrual Payroll

c) Retentions

What is a fixed asset? a) Assets that will not be sold for at least one year b) Assets that can be turned into cash within the fiscal year c) The actual material that is kept on hand d) A note that is due within one year

a) Assets that will not be sold for at least one year

Why is net worth so important on a balance sheet? a) Net worth represents the amount of money the owner has invested in the company as well as the profits that the company has retained. It also tells how much of the company’s assets belong to the owner. b) Net worth shows how much profit a company has made and indicates how this compares to the amount of sales the company has made c) Because net worth is done once a year, it is important in determining the success of the coming year and how to plan for the coming years’ success d) Net worth represents the total earning of a company from its start less the total money distributed to the owners since the company was formed and is a good indicator where the company is headed

a) Net worth represents the amount of money the owner has invested in the company as well as the profits that the company has retained. It also tells how much of the company’s assets belong to the owner.

An income statement should be prepared how often? a) Prepared weekly b) Prepared monthly c) Prepared yearly d) Whenever you or management wants to review the profit and loss

d) Whenever you or management wants to review the profit and loss

When a figure is entered by mistake as an asset instead of a liability on the balance sheet, which one of the following results? a) This means the error will be three times as great b) This means the error will be twice as large c) This means the error will be half as large d) This means the error will be insignificant

b) This means the error will be twice as large

Which would be the best way to tell if your company is profitable or not? a) Check your bank account b) Compare the size of this years inventory with last years inventory c) Review the balance sheet d) Review the income statement

d) Review the income statement

Select an item that is a direct cost a) Pencils, pens and miscellaneous office supplies b) Office rent c) The depreciation of office equipment d) Payroll taxes

d) Payroll taxes

What is direct labor comprised of? a) The actual cost of labor payroll b) The actual cost of labor and payroll taxes c) The expenses charged to overhead d) The labor and labor burden

a) The actual cost of labor payroll

Which of the following below, is an example of an indirect cost? a) Labor and material costs b) Permit costs c) Performance bond costs d) Marketing costs

d) Marketing costs

What is true of overhead? a) Overhead consists of expenses necessary to run a company but not necessarily expenses incurred on the job site b) Overhead is important to include in bids c) Overhead includes advertising, bad debts, and storage charges d) All of the above

d) All of the above

What is considered overhead? a) Labor and material costs b) Permits and performance bonds costs c) Rent and office expenses costs d) Any cost that is incurred on the job site

c) Rent and office expenses costs

When a contractor is preparing to bid a job, what is the average overhead? a) 8 to 10% b) 20% c) 25% d) 40%

c) 25%

The best tools to use to see how business is doing is the balance sheet and the income statement. What is the difference between these two statements? a) An income statement shows the net worth of the business and the balance sheet shows the monthly expenses b) An income statement shows what you own, while the balance sheet shows how it was earned c) The income statement shows the income earned over a period of time and the balance sheet shows the equity at a specific point in time d) The income statement and the balance sheet are used to show the companies, assets, liabilities, and the owner’s equity

c) The income statement shows the income earned over a period of time and the balance sheet shows the equity at a specific point in time

The depreciation is shown where on the balance sheet? a) In the income and expense section b) In the balance sheet section c) In the new worth section d) In the fixed asset section

d) In the fixed asset section

Why is depreciation important to a contractor? a) It lets the contractor know the true value of his assets and the value of his company b) Because depreciation is an expense and because it reduces taxable income c) Depreciation is the difference between assets and liabilities that indicates the net worth of the company d) Depreciation appears on the balance sheet and the income statement. If this figure is not known, it will be difficult to determine the true value of the assets and may lead to bankruptcy if not controlled

b) Because depreciation is an expense and because it reduces taxable income

A contractor has a truck worth $10,000 that has a useful life of 10 years. He depreciates it at 10% for the first year for income tax purposes. In the second year the contractor wants to write off the remaining 10 years. a) This would not be possible b) This would be legal if the IRS is notified c) The contractor is allowed to do this with a truck, a fixed asset, but not with a liquid asset d) The contractor can depreciate the truck anyway he wishes

a) This would not be possible

What is the purpose for having a budget? a) It is one way to help control expenditures b) It is a tool to set limits and if the limits are exceeded then reasons can be identified for exceeding the limits c) Budgets are useful in planning the cash flow d) All of the above

d) All of the above

What is NOT a recommended billing practice? a) To bill in a timely manner on a simple, itemized form and require payment in 30 days b) Insist on cash payments for service calls c) If the customer has good credit, encourage time payments d) If you are having collection problems then consult with an attorney

c) If the customer has good credit, encourage time payments

What is the best method for handling a customer’s account that is 30 days due? a) Send the customer’s account to a collection agency b) You can put the customer on a new payment schedule c) Start charging the customer interest on their account d) None of the above

c) Start charging the customer interest on their account

If there is a difference between the actual inventory and the inventory on paper, what would cause the difference? a) Theft, mistakes and natural losses will cause a difference b) There will never be a substantial difference c) There will be difference because of depreciation d) All of the above

a) Theft, mistakes and natural losses will cause a difference

The major reason why contractors go out of business is because: a) They take on too many jobs and poor scheduling b) They take funds from one job to finance another job c) They float big bank loans d) All of the above

d) All of the above

What could be a reason for a business to fail? a) The business expands too rapidly b) The contractor takes on too much work c) The contractor’s lack of business knowledge d) All of the above

d) All of the above

What is overhead? a) The ongoing expense to operate a business b) The space above your head c) The cost of the materials on a job d) The amount of money claimed by the owner at the end of a job.

a) The ongoing expense to operate a business

What is Profit? a) The amount you need to accomplish a Construction Project in California. b) The money you earn from the sale of materials before taxes. c) a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something. d) None of the above

c) a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.

What is Direct Cost? a) The price of doing business. b) The price of overhead and taxes combined c) The price of Labor d) Direct costs are costs which are directly associated with the cost of a project.

d) Direct costs are costs which are directly associated with the cost of a project.