California State Contractors License Law and Business Test Study Guide Questions And Answe, Exams of Business and Labour Law

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Law and Business Test Study Guide

Questions And Answers

Who must be licensed as a contractor? - correct answer Anyone who offers to or does construct/alter on any job that costs 500 dollars or more. Is anyone exempt from the requirements to have a license? - correct answer Yes. - If project is less than $500. - Government or other public personnel on public projects. - Officers of a court within the scope of their office. - Public utilities under specified conditions. - Oil and gas operations done by owner or lessee. - Owner-builders who build or improve their own property if THEY do the work themselves, contract with a licensed contractor, or improve any item/main residence, resided there over a year prior to work completion, and prior to sale. - A seller of installed carpets who contracts with a licensed carpet installer and certifies it - Security alarm companies licensed by BSIS - Individuals who install Satellite antenna systems at residences Do I need to reside in California to get and keep a license? - correct answer No. What kind of experience is required for a CA cont's license? - correct answer At least 4 years of journey-level experience in the past 10 years before filing.

Law and Business Test Study Guide

Questions And Answers

How old do your have to be to get a contractors license. - correct answer 18 What are the types of licenses issued? - correct answer 5 types: Sole Owner, Partnership, LLC, Corporation, & Joint Venture. Joint Venture licenses are made up of 2 individual active licenses for a specific purpose. Does California recognize contractors licenses from other states or countries? - correct answer No! To be a contractor in CA, you must apply for and be issued a license. CA has reciprocity with AZ, LA, NV, and UT, but you will still have to take the law & business exam. What charge is it to contract without a license? - correct answer Misdemeanor, meaning potential jail time, fines and administrative fines Are there educational requirements to obtain a contractors license? - correct answer No What are the contractor's license classifications? - correct answer Class A - Engineering. Class B - Building. Class C - Specialty

Law and Business Test Study Guide

Questions And Answers

Can technical training and apprenticeship training substitute the required training required for the 4 years needed. - correct answer Yes. As long as the applicant has a minimum of 1 year of practical experience. Are all applicants required to submit to a background check? - correct answer Yes What are the total fees I must pay to obtain a contractor license? - correct answer $480.00. The non-refundable processing fee of $300 and the two year initial license fee of $180. Current fees are printed on the application forms and notices. How often do I have to renew my license? - correct answer every two years Will I receive notice before my active license expires? - correct answer Yes. 60 days, but remember it is your responsibility to know and renew without being reminded. What is the active license renewal fee? - correct answer $360. You are required to renew every two years.

Law and Business Test Study Guide

Questions And Answers

Is there a fee for renewing an active license - correct answer $180. Inactive licenses must be renewed how often? - correct answer Every four years What is the minimum operating capital that you must have to qualify to be a contractor? - correct answer $ If you are changing the business name or address, or changing the personnel or business type, how long do you have to notify the state of those changes? - correct answer 90 days If you change owners or the business entity, changing the license structure, can you renew your license at the end of the year or do you need to apply for a new one. - correct answer Apply for a new one. Can your old license be renewed? - correct answer Yes. If your license has been expired between 3 to 5 years. Another name for the qualifier. - correct answer The test-taker. Or the person whom the license is going to be issued.

Law and Business Test Study Guide

Questions And Answers

What is the qualifier called if he/she is an individual? - correct answer The owner What is the qualifier called if he or she is a partner? - correct answer Qualifying Partner. What is the qualifier called if he or she is an officer? - correct answer RMO, Responsible Managing Officer What is the qualifier called if he or she is an employee? - correct answer RME, Responsible Managing Employee How many hours is an RME, Responsible Managing Employee required to work. - correct answer 80% or 32 hours How many licenses can an Owner or Qualifying Partner qualify for at a time. - correct answer 3 How may licenses can an RME or RMO qualify for at a time? - correct answer 1

Law and Business Test Study Guide

Questions And Answers

Can you lend your license to someone? - correct answer No. That would be punishable by law. What must be on file with CSLB before an active contractor's license can be issued? - correct answer A current contractor bond($15, required for all classifications) or cashier's check A qualifying individual must have a $12,500 bond or cashier's check for:

• correct answer 1. Each RME. 2. Each RMO, unless the RMO owns 10%

• voting stock. 3. Each RME/RMO, unless they own 10%+ of the membership interest in the LLC Can you abandon a project without a legal excuse? - correct answer No. This would be cause for disciplinary action. It is classified as "Breach of Contract". A contractor is not prohibited from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work is _____ and supplemental to the primary job. - correct answer Incidental and supplemental to the primary job. Otherwise it must be performed by a sub. How many bonds can be in effect at a time? - correct answer Only one.

Law and Business Test Study Guide

Questions And Answers

What happens if your surety company cancels a required bond? - correct answer Your license will be suspended. What happens if the RMO is no longer at least 10% voting stock, a payment/judgment reduces the amount of a bond, or you fail to maintain a disciplinary bond? - correct answer Your license will be suspended. How soon are you required to report a construction-related civil court judgment to CSLB? - correct answer Within 90 days of the judgment date Under what conditions may you add a classification to your license? - correct answer Only if your license is renewed and in good standing In drawing up contracts, contractors should pay strict attention to the requirements for _____ of notices and disclosures? - correct answer Print typeface and point size Text in any printed form shall be in at least ______-point type - correct answer 10-point type

Law and Business Test Study Guide

Questions And Answers

Can you use funds from one project to finish another? - correct answer No. This falls under the category of Larceny and is a misdemeanor or felony. May a home improvement salesperson work for more than one contractor? - correct answer Yes What are the qualifications for a home improvement salesperson? - correct answer at least 18 years old. What are the main duties of a contractor who is also a manager? - correct answer to plan and direct the major activities of the business; coordinate employee work and materials; and train, direct, and advise employees in supervisory and non-supervisory positions The Functional Areas of Management Include: - correct answer Planning - DecisionMaking/Delegation - Standarization(efficiency/routine/pattern) - Controls(to warn manager when actual outcome is different than expectation) The Behavioral Aspects of Management Include: - correct answer Human Relations - Cooperation - Responsibility - Communication - Executive Ability

Law and Business Test Study Guide

Questions And Answers

Who is responsible for making sure that the information that informs business decisions is complete and accurate? - correct answer The manager What are the 6 Forms a business can take? - correct answer Sole Ownership - General Partnership - Limited Partnership - Corporation - "S" Chapter Corp - LLC What is required to sell tangible personal property? - correct answer A Seller's Permit For a work-incurred injury/illness, an employer-contractor is REQUIRED to provide ______ and _____. - correct answer Weekly benefit payments (indemnity) and necessary medical/hospital treatment If the employer has one or more employees, even part-time, they are required to insure for _______ - correct answer worker's compensation claims What are the 3 types of bonds? - correct answer Performance, Payment & Contract Bonds

Law and Business Test Study Guide

Questions And Answers

How soon must you file a complete report of an occupational injury/illness that results in lost time or requires medical aid? - correct answer Within 5 days after the employer gains knowledge Every employer-contractor subject to the provisions of the workers' compensation laws MUST: - correct answer - Give every new employee written notice of their right to worker's comp - Post in a frequented location a Notice to Employees poster - Post information regarding protections & obligations of employees Penalties for worker's comp noncompliance are: - correct answer - Failure to secure payment of compensation required by law is misdemeanor, and license may be suspended/revoked. Also possibly a "stop order", restraining order, or penalty assessment order. Is it a crime to use false or misleading advertising? - correct answer Yes. It is a misdemeanor. What is a joint venture license? - correct answer Two or more qualifiers of different licenses who seek to combine their licenses and expertise for a specific project. What is "Cash Basis of Accounting"? - correct answer revenue is recognized when cash is actually received, and expenses are deductible

Law and Business Test Study Guide

Questions And Answers

in the year paid (unless they should be taken in a different period to clearly reflect income) What is "Accrual Basis of Accounting" - correct answer recognizes revenues when earned and expenses when incurred, regardless of when payment is received or made. Thus, this method allows the matching of revenues and associated expenses for individual periods of time. What does Direct Labor Burden include? - correct answer all payroll taxes, insurance, and employee benefits associated with the labor payroll. How do you determine Pretax Income? - correct answer the total operating expenses are subtracted from the sales of residences What is working capital? - correct answer The difference between the total current assets and the total current liabilities Can a contractor collect more than the percentage already completed on the contract? - correct answer NO

Law and Business Test Study Guide

Questions And Answers

What are the 2 sources of financing? - correct answer Equity Funds(supplied by investors who acquire some control of the business & share of future profits) and Debt What are the four types of contractual agreements between the builder and owner? - correct answer the lump-sum, the cost-plus, the unit- price, and the guaranteed-maximum cost contract. How long is a joint venture valid for? - correct answer 2 years after first given. If a QP leaves, what can the remaining party file to get more time? - correct answer A continuance of up to 1 year in order to complete the project. If a QP leaves, the remaining party has __ days to report it to the state. - correct answer 90 days What must qualifiers do every day regarding to the job site? - correct answer visit the site daily. When must the subcontractors be paid? - correct answer 7 days after each progress payment by the owner to the direct contractor.

Law and Business Test Study Guide

Questions And Answers

____ is the task of preparing a detailed cost estimate for the job, including material. labor, overhead, as well as the profit or mark-up. - correct answer Bidding Materials, labor, permits, loan fees, subs, are all considered what type of costs? - correct answer Direct Costs Office space rent, office supplies, advertising, staff, insurance, and utility bills are considered what type of costs? - correct answer Overhead costs Equipment maintenance, truck maintenance, lubrication, tools, fuel, equipment are considered what type of costs? - correct answer Indirect Costs Written offers from contractors to undertake a construction job in return for a sum of money which can be negotiated, limited or selective competition, or an open competition. - correct answer Construction bid The 3 essential estimates needed to determine your "mark up" - correct answer Gross Income, Overhead expenses, Net profit desired.

Law and Business Test Study Guide

Questions And Answers

The industry average for Net profit percentage is... - correct answer 6% What is the formula for determining "mark up". - correct answer OE + NP = A1...GI - A1= JC...GI / JC = Mark up Where is the best place to look for bidding advice? - correct answer Recent job history. Do sales tax costs need to be included in the bid estimate? - correct answer Yes If the subs bid is too low, should you let him know? - correct answer Yes, it is ethical and good practice to call the sub and inform him when the bid is too high or low. Should you build against code if the customer insists? - correct answer No. It is illegal to build against code. Should you bid against other companies or against the job? - correct answer Always bid against the job. Doing otherwise will cause you troubles in paying subs, materials, and equipment needed.

Law and Business Test Study Guide

Questions And Answers

Should you take your time and double check everything before leaving a quote or just get it done quickly? - correct answer Take your time and be critical, ensure you understand all aspects of the plan, walk the job and double check the bid estimate. An agreement with specific terms between two or more people for performance and compensation. - correct answer Contract A contract is not enforceable unless it has ___ signatures? - correct answer 2. The customer and the contractor. What is the standard contract used by customers and contractors? - correct answer Home Improvement Contract. It establishes and agreement between the customer and the contractor for the work being done. What is the required down payment for a contract? - correct answer 10% or $1000. Whichever is less. Time given to the customer to cancel the contract? - correct answer midnight of the 3rd business day.

Law and Business Test Study Guide

Questions And Answers

Time given to the contractor to return all money given by the customer back to him/her. - correct answer 10 days, beginning on the day he or she cancels the contract. days given to the customer to make all materials left on the property available for pick up. - correct answer 20 days The contractor has this many days from the declared start date, to start the job before breaching the contract. - correct answer 20 days Contracts should always be in writing, but they must be in writing if the job costs more than ___. - correct answer $ What is a mechanics lien? - correct answer A lien on a property What is a stop notice? - correct answer A lien on funds A lien placed upon the property that received construction. It is filed by the contractor and is used if the contractor does not receive payment for their work and properly filed a Preliminary Notice. - correct answer Mechanic's Lien

Law and Business Test Study Guide

Questions And Answers

Within _____ days after completion, you may record a Notice of Completion. - correct answer 10 If no Notice of Completion or Cessation is recorded, and either: - correct answer 1. Labor ceases and owner/agent uses the work of improvement 2. Owner/agent accepts improvement, then: (a) Within 90 days of the above, record a Claim of Lien, and File a Lien Foreclosure Action within 90 days Can you record a Mechanic's Lien and a Stop Payment Notice on private work? - correct answer Yes Can you record a Mechanic's Lien and a Stop Payment on public work? - correct answer No. A Mechanic's Lien is limited to private work. What must be filed to keep the right to a Mechanic's Lien? How many days do you have to file it? - correct answer A Preliminary Notice Form must be filed within 20 days of signing the contract. Subcontractors, suppliers and anyone else who is going to participate in the job must also file a Preliminary Notice if they want to keep their right. Who files the Notice of Completion? How long does that person have? - correct answer The owner. 15 days to file it.

Law and Business Test Study Guide

Questions And Answers

How many days does the contractor have to file a Mechanic's Lien? - correct answer If the owner does not file a Notice of Completion within 15 days, contractor has 90 days. If the owner files within the proper time, Contractor has 60 days. Small claims courts can only handle cases that are less than what amount? - correct answer An individual or small business owned by an individual can file up to 2 cases a year under $7500. Businesses and Corporations can file up to 2 cases a year under $ Can you appeal a decision mad in small claims court? - correct answer Yes. Can you appeal a decision made in an arbitration hearing? - correct answer No. In addition to Mechanic's Lien and a Stop Payment Notice you may also file a ___ ___ for Breach of Contract. - correct answer Civil Suit Whats the name of the form that notifies people there is a pending lawsuit on their property. - correct answer Lis Pendens

Law and Business Test Study Guide

Questions And Answers

If you file a lien, but then get paid, what should you do? - correct answer File a lien release form. Awarding Authority is: - correct answer the owner or the agent of the owner who awards an original building or construction contract, also known as the prime contract. This term is usually used with public works. Bonded Stop Notice is a - correct answer bond that accompanies a stop notice to a construction lender and must be in a sum equal to 1-1/ times the amount of the claim. must be delivered by certified mail or in person A Claimant is - correct answer The person claiming or asserting the right to demand Claim of Lien (mechanics lien) is a - correct answer written statement signed and verified by the claimant/claimant's agent that must state: 1. amount of claimant's demand 2. name of owner 3. labor, services, equipment, materials furnished by the claimant; 4. name of the person who employed the claimant 5. A description of the site Lien Foreclosure Action is a - correct answer lawsuit to foreclose the mechanics lien

Law and Business Test Study Guide

Questions And Answers

Lis Pendens is - correct answer a notice that a lawsuit is pending and that the lawsuit affects real property. It warns everyone who might acquire the property that they may be bound by an adverse judgment Notice of Cessation is - correct answer a written notice, signed and verified by the owner/agent, stating: 1. Approx date labor stopped 2. Confirmation that no further labor has been done 3. name/address of owner 4. Nature of interest/estate 5. street address of site 6. name of contractor The Notice of Cessation must be recorded in the Office of the County Recorder of the county in which the site is located and will be effective only if labor has ceased continuously for at least - correct answer 30 days before the recording Notice of Completion is - correct answer a written notice, signed/verified by owner/agent stating: 1. Date job finished; 2. Name/address of owner; 3. Nature of the interest/estate 4. Street address of site 5. Name contractor The Notice of Completion must be recorded within - correct answer 10 days

Law and Business Test Study Guide

Questions And Answers

Notice of Non-Responsibility is - correct answer a written notice signed/verified by person who owns/has interest in the property, stating: 1. Desc of site 2 Name and nature of title/interest 3.name of purchaser/lessee 4.Statement that they will NOT be responsible for any claims If changes are made to the job and the original job is not complete yet, what form should be filed? - correct answer A Contract Change Order Who has to ensure that the subcontractors are licensed and insured? - correct answer Direct Contractor How many bathrooms must be provided for every 20 employees? - correct answer One Are workers required to bring their own water to work? - correct answer No. The work site is responsible for providing clean and accessible drinking water to employees. Does there need to be an emergency kit on site? - correct answer Yes Labor must have ceased for at least ____ days before the owner is entitled to record a Notice of Cessation - correct answer 30

Law and Business Test Study Guide

Questions And Answers

Should the contractor review the plan and specifications with his subs. Is it necessary to write every little detail down for them? - correct answer Yes, and Yes, as detailed as possible. Can a contractor receive payment for work that has not been completed? - correct answer No. Progress payments cannot exceed the value of the work performed at any given time. When must you pay the subs? - correct answer within 7 days of receiving progress payment. What is the term given to a worker in training? - correct answer Apprentice What is the term given to a worker who is able to perform trade work unsupervised? - correct answer Journeyman Who is responsible for training employees? - correct answer Foreman, Supervisor What is a foreman required to do for safety reasons, every ten days? - correct answer Conduct a safety meeting

Law and Business Test Study Guide

Questions And Answers

Covers your property, tools and office against fire, storm, theft etc... It does not cover your employees tools. - correct answer Property Insurance Covers your vehicles, trucks, equipment or trailers while you or your employees are driving them. - correct answer Vehicle Insurance Covers against vandalism and theft of your property at the job site. - correct answer Builder's Risk Insurance Covers the loss of a person who performs a crucial role in your company by compensating the business. - correct answer Key Person Insurance It covers interruptions such as lawsuits, absence of owner, severe weather... - correct answer Business Interruption Insurance Covers the death of a person by compensating the survivors, or family members. - correct answer Life Insurance This policy goes above and beyond standard insurances and is therefore more expensive. Most smaller companies do not have this for that reason. - correct answer Umbrella Policy

Law and Business Test Study Guide

Questions And Answers

A No Fault insurance purchased by the employer and supervised by the state designed to limit the liability of the employer by reducing costly lawsuits and providing prompt rehabilitation for job related injuries. - correct answer Worker's Compensation Insurance If you have how many employees, even for part time, a worker's comp policy must be obtained and filed. - correct answer One A workers compensation policy is not required for ___ or ___ licenses - correct answer inactive or expired licenses If the contractor has no employees, worker's comp is not required. However he or she must file what, which is available online. - correct answer An exemption form What two things should be considered when buying insurance? - correct answer Cost and coverage Protects the suppliers, subcontractors and laborers in case the contractor does not pay them what is owed under the contract. - correct answer Payment Bond

Law and Business Test Study Guide

Questions And Answers

Protects the owner in case the job is abandoned or the work proves to be unacceptable. - correct answer Performance Bond Which bond covers both payments and completion of the contract? - correct answer Contract Bond Money owed to the owner or owners of a company. - correct answer Equity debts which are due within the year - correct answer Current liabilities debts which are due beyond one year, like mortgages or a bank loan. - correct answer Long Term Liabilities Cash or other property that can be easily converted to cash. - correct answer Liquid asset Money remaining after all expenses and taxes have been paid. - correct answer Net Income A written agreement to repay borrowed money. - correct answer Note, or loan