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CSLB Law & Business Exam practice questions

240 free questions with answers and explanations.

Practice test
  1. 151.A contractor uses the accrual method of accounting. In March, the contractor completes a job and sends an invoice for $15,000, but the customer does not pay until April. Under the accrual method, when should the $15,000 be recorded as revenue?Business Finances
  2. 152.A licensed C-39 roofing contractor operates without any employees, performing all work personally. Under California law, is this contractor required to carry workers' compensation insurance?Employment Requirements
  3. 153.A homeowner's water heater fails and floods part of the home. The homeowner contacts a contractor and insists that repairs begin immediately, before the standard three-business-day cancellation period would normally run. What must occur for the contractor to legally begin work immediately with the homeowner waiving the right to cancel?Contract Requirements and Execution
  4. 154.An employee's workweek totals 45 hours, with no single workday exceeding 8 hours. Under California overtime law, how many of those hours must be paid at one and one-half times the regular rate?Employment Requirements
  5. 155.An RME is found to own only 5% of the shares of the corporation she qualifies. Because her ownership is less than 10%, what additional bond must the corporation obtain covering her role as qualifier?Business Organization and Licensing
  6. 156.A licensed contractor's mechanics lien rights on a project 'relate back' to which point in time for priority purposes against other liens and encumbrances recorded later?Insurance and Liens
  7. 157.A contractor wants to see the company's total assets, liabilities, and net worth as of December 31. Which financial statement should be reviewed?Business Finances
  8. 158.A sole proprietor contractor expects to owe more than $1,000 in federal income tax for the year after subtracting withholding and credits. According to IRS rules, what should the contractor do to avoid an underpayment penalty?Business Finances
  9. 159.A contractor issues wage statements to employees each pay period. Under Labor Code Section 226, which of the following must be included on every itemized wage statement?Employment Requirements
  10. 160.During a remodel, a contractor identifies additional work needed due to unforeseen conditions. Before starting the extra work, the contractor tells the homeowner the price will be billed 'time and materials' without providing any written estimate or written change order, and the homeowner orally agrees. Has the contractor complied with California law?Contract Requirements and Execution
  11. 161.Under California law, when may a contractor begin work on a home improvement project after the contract has been signed?Contract Requirements and Execution
  12. 162.An employee suffers a workplace injury that is recordable but does not meet the criteria for the immediate 8-hour Cal/OSHA fatality/serious injury report. Under Cal/OSHA recordkeeping regulations, within how many calendar days must the contractor enter the injury on the OSHA 300 log and complete the related incident report?Employment Requirements
  13. 163.A supervisor labels a spray bottle of diluted cleaning chemical for daily use by the crew. Under Hazard Communication requirements, what must this label include at minimum?Safety
  14. 164.A drywall installer sets his own daily schedule, supplies his own tools and equipment, and receives no instruction from the contractor on how to complete the work. Which prong of California's ABC test does this scenario most directly address?Employment Requirements
  15. 165.A contractor with 15 employees must comply with Cal/OSHA recordkeeping rules. Between what dates each year must the contractor post the OSHA Form 300A summary of work-related injuries and illnesses in a visible workplace location?Employment Requirements
  16. 166.An employer pays an employee $10,000 in wages during the calendar year. Under California's Unemployment Insurance (UI) system, the taxable wage base per employee is $7,000 per year. How much of this employee's wages are subject to State Unemployment Insurance (SUI) tax for the year?Employment Requirements
  17. 167.A contractor receives full final payment from a homeowner and signs a release document with no conditions attached, waiving all further lien and claim rights. What type of document did the contractor sign?Insurance and Liens
  18. 168.An owner disputes a validly recorded mechanics lien and wants to sell the property free of the lien cloud while the dispute is litigated. What tool allows the owner to remove the lien from title?Insurance and Liens
  19. 169.An employee is scheduled to work a 6-hour shift and is not provided any meal break during that shift. Under California wage and hour law, what must the employer do?Employment Requirements
  20. 170.A crew is working in a 12-foot trench for a utility installation. Cal/OSHA requires testing for hazardous atmospheres in trenches deeper than what threshold, where such atmospheres may reasonably be expected?Safety
  21. 171.A general contractor wants to sign a conditional waiver and release upon progress payment before actually receiving a subcontractor's check. What is the legal effect of this document once the payment is later honored?Insurance and Liens
  22. 172.A contractor's balance sheet shows current assets of $90,000 and current liabilities of $45,000. What is the contractor's current ratio?Business Finances
  23. 173.A contractor introduces a new type of power tool on a job site that was not previously used. Under Cal/OSHA's IIPP requirements, what must the employer do regarding employee training?Safety
  24. 174.A residential contractor has 8 employees working in construction throughout the year. Under Cal/OSHA recordkeeping rules, is the contractor required to maintain an OSHA 300 injury and illness log?Safety
  25. 175.A piece-rate flooring installer earns $760 in piece-rate wages during a 40-hour workweek, of which 2 hours were spent on legally required rest breaks (not producing flooring). The remaining 38 hours were spent actively installing flooring. Under Labor Code Section 226.2, what is the correct additional rest break compensation owed to the employee for that week?Employment Requirements
  26. 176.A plumbing subcontractor properly records a mechanics lien on a private commercial project. The owner disputes the debt and refuses to pay. What is the deadline for the subcontractor to file a lawsuit to foreclose on the lien?Insurance and Liens
  27. 177.A licensed plumbing contractor operates as a genuinely independent business, has her own separate business license, advertises to the public, sets her own hours, and contracts with a general contractor to perform plumbing work on a single project under a written agreement specifying a fixed project price. Which legal framework may apply instead of the strict ABC test to evaluate this business-to-business relationship?Employment Requirements
  28. 178.A general liability insurance policy carried by a licensed contractor primarily protects against which type of loss?Insurance and Liens
  29. 179.Three individually licensed contractors decide to form a joint venture to bid on a single large commercial project, intending to contract in the joint venture's own name. What must they do regarding CSLB licensing?Business Organization and Licensing
  30. 180.A contractor's Cal/OSHA Form 300 (Log of Work-Related Injuries and Illnesses) covers calendar year 2023. Under Cal/OSHA recordkeeping rules, until what date must the contractor retain that log?Employment Requirements
  31. 181.A contractor hires a new full-time employee who begins work on June 1. Under California law, by what deadline must the employer report this new hire to the EDD's New Employee Registry?Employment Requirements
  32. 182.A homeowner signs a contract for construction of a swimming pool for $40,000. What is the maximum down payment the contractor may legally collect at signing?Contract Requirements and Execution
  33. 183.A contractor makes a $2,000 monthly payment on an equipment loan. Of this payment, $450 is interest and $1,550 is principal. How should this payment be reflected in the contractor's financial records?Business Finances
  34. 184.A contractor's direct job costs are $40,000. The contractor needs the job price to cover 15% overhead and also generate a 10% net profit, both figured as a percentage of the total selling price. What price must be charged?Business Finances
  35. 185.A material supplier delivers lumber to a job site on March 1. Under California law, by what date must the supplier serve a preliminary 20-day notice to fully preserve lien rights for all materials furnished?Insurance and Liens
  36. 186.A subcontractor performs work on a public school construction project and is not paid by the general contractor. Since public property cannot be encumbered by a mechanics lien, what remedy is available to the subcontractor?Insurance and Liens
  37. 187.A contractor estimated a job's labor cost at $18,000, but the actual labor cost recorded through job costing came to $21,600. What is the percentage cost overrun compared to the original estimate?Business Finances
  38. 188.A contractor tells a Cal/OSHA compliance officer that the company's Injury and Illness Prevention Program (IIPP) is covered verbally at monthly toolbox talks but is not written down anywhere. Does this satisfy Cal/OSHA requirements?Safety
  39. 189.A contractor has $30,000 in monthly fixed overhead and averages a 25% gross profit margin on sales. What monthly sales volume is needed to break even?Business Finances
  40. 190.A contractor prepares a home improvement contract for a $22,000 room addition. Under California law, which of the following disclosures regarding insurance must appear in the contract?Contract Requirements and Execution
  41. 191.A licensed corporation promotes its vice president of operations to also serve on the board of directors, but she remains uninvolved in qualifying the license. Under CSLB rules, what must the corporation do regarding this change?Business Organization and Licensing
  42. 192.A contractor purchases a work truck for $45,000. The truck has an estimated salvage value of $5,000 and a useful life of 8 years. Using straight-line depreciation, what is the annual depreciation expense?Business Finances
  43. 193.A licensed C-27 landscaping contractor wants to also perform work involving the construction of major highways and bridges. Which classification would be required for this type of fixed works project, and why can the C-27 not be used?Business Organization and Licensing
  44. 194.A homeowner decides to cancel a home improvement contract on the third business day after signing. Under California law, how must the homeowner exercise this right?Contract Requirements and Execution
  45. 195.A newly hired employee is assigned on their first day to work directly with a chemical solvent. Under the Hazard Communication Standard, when must the employer provide hazard training covering that solvent?Safety
  46. 196.A contractor is preparing a cash flow statement. Which of the following activities would be classified under 'Cash Flow from Operating Activities'?Business Finances
  47. 197.A contractor is managing project cash flow and receives a partial payment for work completed. How should this payment be recorded in the accounting system if the contractor uses the accrual method?Business Finances
  48. 198.A contractor is bidding on a public works project to renovate a city library. The project is expected to last for 18 months. When should the contractor obtain the prevailing wage rates for this project?Public Works
  49. 199.A contractor is preparing a bid for a new project. To accurately estimate the direct labor costs for the project, which of the following should be included in the calculation?Business Finances
  50. 200.A contractor is evaluating the company's ability to cover its short-term debts with its most liquid assets. Which financial ratio would be most appropriate for this assessment?Business Finances