CSLB Law and Business 2 | Exam Revision Questions and Correct Answers
With 100% Correct Answers | Latest 2025 Update.
Overhead includes ___________. - ANSWER- Fixed cost
The result of subtracting liabilities from assets is known as: - ANSWER- Net worth
Net worth is also known as owner's or stockholders' equity.
Although employers report social security (FICA) tax to the IRS, what are the appropriate shares
paid by the employee and employer? - ANSWER- 50% employer and 50% employee
When collecting sales tax from a customer for goods, to which agency is the sales tax reported and
paid? - ANSWER- California Department of Tax and Fee Administration
Sales tax is a State tax and is payable to the California Department of Tax and Fee Administration
(CDTFA), formerly call the State Board of Equalization (BOE). State income taxes are payable to
the Franchise Tax Board. The IRS only collects Federal taxes.
Which of the following is an example of an indirect cost? - ANSWER- Marketing is an
overhead cost. Marketing costs cannot be traced to a specific project.
Depreciation is: - ANSWER- The decrease in value of a fixed asset due to wear and tear,
passage of time, or obsolescence
Only fixed assets can be depreciated. Therefore, the depreciation affects fixed assets and not
current assets or liabilities.
, What are the fixed costs in the construction business? - ANSWER- Expenses such as rent,
manager's salary, etc.
Fixed costs are those costs that have a fixed amount paid monthly. Rental expense is usually a
fixed amount paid monthly, therefore it is a fixed cost. The cost of a company party can vary and
therefore it is a variable cost.
Which of the following items is listed as a current asset on a balance sheet? - ANSWER-
Accounts receivable
What is the purpose of the IRS publication, Circular E? - ANSWER- An employer's Tax Guide
that has instructions on how to calculate withholding tax and depositing employee's taxes.
If a contractor wanted to show funding to a financial institution, what would be the LEAST
applicable thing to show? - ANSWER- Vehicle depreciation
A company's profits are calculated by: - ANSWER- Subtracting expenses from revenues
Which of the following costs do NOT contribute to the direct labor burden? - ANSWER-
Company use of personal vehicles
Direct labor burden refers to: - ANSWER- Payroll costs for labor, such as taxes and insurance
Do not confuse "direct labor" with "direct labor burden." Direct labor is the actual cost for labor
such as $20/hour. Direct labor burden includes all other costs associated with keeping employees.
Direct labor burden includes costs such as unemployment taxes, workers' compensation insurance,
etc.
Which of the following statements best describes the difference between the balance sheet and
income statement? - ANSWER- The balance sheet shows net worth at a particular point in time,
while the income statement shows profit earned over a period of time.
With 100% Correct Answers | Latest 2025 Update.
Overhead includes ___________. - ANSWER- Fixed cost
The result of subtracting liabilities from assets is known as: - ANSWER- Net worth
Net worth is also known as owner's or stockholders' equity.
Although employers report social security (FICA) tax to the IRS, what are the appropriate shares
paid by the employee and employer? - ANSWER- 50% employer and 50% employee
When collecting sales tax from a customer for goods, to which agency is the sales tax reported and
paid? - ANSWER- California Department of Tax and Fee Administration
Sales tax is a State tax and is payable to the California Department of Tax and Fee Administration
(CDTFA), formerly call the State Board of Equalization (BOE). State income taxes are payable to
the Franchise Tax Board. The IRS only collects Federal taxes.
Which of the following is an example of an indirect cost? - ANSWER- Marketing is an
overhead cost. Marketing costs cannot be traced to a specific project.
Depreciation is: - ANSWER- The decrease in value of a fixed asset due to wear and tear,
passage of time, or obsolescence
Only fixed assets can be depreciated. Therefore, the depreciation affects fixed assets and not
current assets or liabilities.
, What are the fixed costs in the construction business? - ANSWER- Expenses such as rent,
manager's salary, etc.
Fixed costs are those costs that have a fixed amount paid monthly. Rental expense is usually a
fixed amount paid monthly, therefore it is a fixed cost. The cost of a company party can vary and
therefore it is a variable cost.
Which of the following items is listed as a current asset on a balance sheet? - ANSWER-
Accounts receivable
What is the purpose of the IRS publication, Circular E? - ANSWER- An employer's Tax Guide
that has instructions on how to calculate withholding tax and depositing employee's taxes.
If a contractor wanted to show funding to a financial institution, what would be the LEAST
applicable thing to show? - ANSWER- Vehicle depreciation
A company's profits are calculated by: - ANSWER- Subtracting expenses from revenues
Which of the following costs do NOT contribute to the direct labor burden? - ANSWER-
Company use of personal vehicles
Direct labor burden refers to: - ANSWER- Payroll costs for labor, such as taxes and insurance
Do not confuse "direct labor" with "direct labor burden." Direct labor is the actual cost for labor
such as $20/hour. Direct labor burden includes all other costs associated with keeping employees.
Direct labor burden includes costs such as unemployment taxes, workers' compensation insurance,
etc.
Which of the following statements best describes the difference between the balance sheet and
income statement? - ANSWER- The balance sheet shows net worth at a particular point in time,
while the income statement shows profit earned over a period of time.
