NEVADA CONTRACTOR GENERAL BUSINESS AND LAW (CMS) EXAMINATION COMPLETE QUESTIONS AND DETAILED SOLUTIONS LATEST UPDATE THIS YEAR JUST RELEASED

NEVADA CONTRACTOR GENERAL BUSINESS AND LAW
(CMS) EXAMINATION COMPLETE QUESTIONS AND
DETAILED SOLUTIONS LATEST UPDATE THIS YEAR JUST
RELEASED


Coverage Areas – Short Summary

 Nevada contractor licensing requirements: Eligibility, classifications, application procedures,
renewals, and disciplinary authority of the Nevada State Contractors Board.
 Business organization and registration: Sole proprietorships, partnerships, corporations, and LLC
requirements for legal operation in Nevada.
 Contract law and execution: Essential contract elements, written agreements, change orders,
breach of contract, and enforceability standards.
 Bidding and estimating practices: Competitive bidding procedures, bid withdrawals, bid bonds,
and ethical estimating responsibilities.
 Financial management and accounting: Job costing, budgeting, cash flow, retainage, financial
statements, and recordkeeping requirements.
 Labor and employment regulations: Payroll obligations, workers’ compensation, unemployment
insurance, discrimination laws, and employee classification.
 Lien law and payment procedures: Preliminary notices, mechanics liens, stop notices, payment
timelines, and release requirements.
 Insurance and bonding: General liability, workers’ compensation, surety bonds, and risk
management responsibilities.
 Safety and OSHA compliance: Employer duties, hazard communication, fall protection, training,
and accident reporting requirements.
 Project management and dispute resolution: Scheduling, documentation, inspections, claims,
mediation, arbitration, and contractor board complaints.



Question 1

A Nevada contractor wants to begin operations legally after receiving board
approval. Which additional requirement is most essential before performing
construction work?

 Obtaining a contractor license number and meeting bond requirements

,  Purchasing construction equipment immediately

 Hiring at least five employees

 Opening two business bank accounts

Answer: Obtaining a contractor license number and meeting bond requirements

Rationale: Nevada contractors must satisfy licensing and bonding requirements
before legally contracting for construction work.

Question 2

Which contract element is necessary for a Nevada construction agreement to be
considered legally enforceable by both parties?

 Offer, acceptance, consideration, and mutual assent

 Oral discussion only

 Witness signatures only

 Notarization in every situation

Answer: Offer, acceptance, consideration, and mutual assent

Rationale: These four elements form the foundation of an enforceable
construction contract under general contract law.

Question 3

A contractor submits a bid containing a significant clerical error discovered
immediately after opening. What should the contractor do first?

 Notify the owner promptly and document the mistake

 Ignore the error and continue

 Increase the contract price later

 Ask another bidder for assistance

,Answer: Notify the owner promptly and document the mistake

Rationale: Prompt written notice preserves potential rights regarding withdrawal
or correction of a mistaken bid.

Question 4

Which business structure generally provides owners with liability protection from
most business debts and claims?

 Limited liability company

 Sole proprietorship

 General partnership

 Joint venture without entity formation

Answer: Limited liability company

Rationale: An LLC typically shields owners from personal liability for many
business obligations.

Question 5

Under Nevada contractor regulations, why is maintaining accurate financial
records especially important for licensed contractors?

 It demonstrates financial responsibility and supports board compliance

 It eliminates all tax obligations

 It replaces insurance requirements

 It guarantees future contracts

Answer: It demonstrates financial responsibility and supports board compliance

Rationale: Accurate records help prove solvency, support audits, and satisfy
regulatory obligations.

, Question 6

A change order is most appropriately used when the owner requests additional
work after the original contract has been executed.

 True

 False

Answer: True

Rationale: Change orders formally modify the scope, price, and time of an existing
contract.

Question 7

What is the primary purpose of a contractor license bond required by the Nevada
State Contractors Board?

 Protecting the public from certain contractor violations and damages

 Guaranteeing project profits

 Paying employee wages automatically

 Replacing general liability insurance

Answer: Protecting the public from certain contractor violations and damages

Rationale: The bond provides financial protection for consumers harmed by
covered contractor misconduct.

Question 8

Which payroll practice is generally required when employees perform
construction work for a Nevada contractor?

 Withholding applicable taxes and maintaining payroll records

 Paying only in cash