Test 1

Question 1

What type of contract can a consumer cancel?

Answer 1

A home solicitation contract that involves carpentry, fencing, texture coating and burglar alarms

Question 2

What statement is true regarding Surety Bonds?

Answer 2

In order to obtain a contractor’s license a surety bond is required

Question 3

What individuals would be required to obtain a contractor’s license?

Answer 3

The fire alarm guy…

Question 4

If a person wants to qualify for more than one active license at a time, they must own at least BLANK of the equity for each business where they serve as the qualifying individual.

Answer 4

20%

Question 5

The Notice To Owner must be included where by the contractor?

Answer 5

On all home improvement projects over $500

Question 6

Who will be least effected by the Notice To Owner?

Answer 6

The lender

Question 7

When a customer has a contract with a contractor to build a home, when does the licensed contractor have lien rights?

Answer 7

Automatically

Question 8

On a private home construction job and a Stop Notice is given on the home to the lender, what should the bond amount be?

Answer 8

1 1/4 times the amount of the actual claim

Question 9

How could a cash flow problem best be prevented?

Answer 9

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

Question 10

What must a contractor display on both sides of their commercial vehicles?

Answer 10

The name, business address, and license number

Question 11

What is the maximum penalty for a contractor that is convicted of price gauging during a declared state of emergency?

Answer 11

1. Permanent license revocation
2. $10,000 fine
3. 2 year in jail

Question 12

At month end, data is posted from the bookkeeping journals to the:

Answer 12

General Ledger

Question 13

What is the minimum length of time that a contract should keep a building report in the files?

Answer 13

5 years

Question 14

Which of the following represents a current asset?

Answer 14

Retentions

Question 15

What is a fixed asset?

Answer 15

Assets that will not be sold for at least one year

Question 16

Why is net worth so important on a balance sheet?

Answer 16

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

Question 17

When a figure is entered by mistake as an asset instead of a liability on the balance sheet, which one of the following results?

Answer 17

This means the error will be twice as large

Question 18

Select an item that is a direct cost?

Answer 18

Payroll taxes…

Question 19

What is direct labor comprised of?

Answer 19

The actual cost of labor payroll (NOT TAXES)

Question 20

When a contractor is preparing to bid a job, what is the average overhead?

Answer 20

25%

Question 21

Depreciation is shown where on the balance sheet?

Answer 21

In the fixed asset section

Question 22

What is not a recommended billing practice?

Answer 22

If the customer has good credit, encourage time payments

Question 23

The most likely reason that a subcontractor would serve the owner with a stop notice, would be?

Answer 23

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