1|Page
Contractors Law Exam CA Practice
Test 1 2025 | Actual Questions
With Verified Answers
An employer remits State income tax and State disability taxes withheld from an
employee's wages to what agency?
a. Internal Revenue Service
b. Employment Development Department
c. Franchise Tax Board
d. Board of Equalization - correct-answer-b. Employment Development
Department
Who pays FICA?
a. employer
b. employee
c. 50% employer and 50% employee
d. 90% employer and 10% employee - correct-answer-c. 50% employer and 50%
employee
How often are FICA taxes reported and paid?
,2|Page
a. weekly
b. monthly
c. quarterly
d. yearly - correct-answer-c. quarterly
Who pays FUTA?
a. employer
b. employee
c. 50% employer and 50% employee
d. 90% employer and 10% employee - correct-answer-a. employer
What happens after an employee's taxable wages exceed $7,000?
a. After $7,000, the FUTA rate increases.
b. After $7,000, the FUTA rate decreases by 50%.
c. After $7,000, the employer does not pay FUTA.
d. Nothing. FUTA is not subject to a wage limit. - correct-answer-c. After $7,000,
the employer does not pay FUTA.
Which of the following may not be deducted from an employee's paycheck?
a. SDI
,3|Page
b. FICA
c. Medicare tax
d. workers' compensation insurance premiums - correct-answer-d. workers'
compensation insurance premiums
To whom do you report and pay sales tax?
a. County Tac Collector
b. Internal Revenue Service
c. Board of Equalization
d. Franchise Tax Board - correct-answer-d. Board of Equalization
How often are you required to pay sales tax?
a. monthly
b. quarterly
c. annually
d. It depends on the expected amount of sales tax. - correct-answer-b. quarterly
When balancing the accounts receivable, which of the following would have no
effect?
a. Posting to the wrong accounts-receivable account.
b. Crediting instead of debiting the accounts-receivable account.
, 4|Page
c. Debiting instead of crediting the accounts-receivable account.
d. Posting a receivable to an accounts-payable account. - correct-answer-a.
posting to the wrong accounts-receivable account.
What kind of discount do lumber yards and other suppliers offer to contractors
who pay their bills promptly?
a. 1/2% - 1%
b. 1% - 2%
c. 4% - 8%
d. 10% - 12% - correct-answer-b. 1% - 2%
If a newly hired employee does not have an SSN, what should be done?
a. The employee must apply for an SSN.
b. The employer must apply on behalf of the employee for an SSN.
c. If a W-2 is provided, an SSN is not needed.
d. Call the police. - correct-answer-a. The employee must apply for an SSN.
Once a budget is finalized, the:
a. contractor should stick to the budget no matter what happens
b. contractor should do the best possible job of staying within the budget
c. budget should be revised each month
Contractors Law Exam CA Practice
Test 1 2025 | Actual Questions
With Verified Answers
An employer remits State income tax and State disability taxes withheld from an
employee's wages to what agency?
a. Internal Revenue Service
b. Employment Development Department
c. Franchise Tax Board
d. Board of Equalization - correct-answer-b. Employment Development
Department
Who pays FICA?
a. employer
b. employee
c. 50% employer and 50% employee
d. 90% employer and 10% employee - correct-answer-c. 50% employer and 50%
employee
How often are FICA taxes reported and paid?
,2|Page
a. weekly
b. monthly
c. quarterly
d. yearly - correct-answer-c. quarterly
Who pays FUTA?
a. employer
b. employee
c. 50% employer and 50% employee
d. 90% employer and 10% employee - correct-answer-a. employer
What happens after an employee's taxable wages exceed $7,000?
a. After $7,000, the FUTA rate increases.
b. After $7,000, the FUTA rate decreases by 50%.
c. After $7,000, the employer does not pay FUTA.
d. Nothing. FUTA is not subject to a wage limit. - correct-answer-c. After $7,000,
the employer does not pay FUTA.
Which of the following may not be deducted from an employee's paycheck?
a. SDI
,3|Page
b. FICA
c. Medicare tax
d. workers' compensation insurance premiums - correct-answer-d. workers'
compensation insurance premiums
To whom do you report and pay sales tax?
a. County Tac Collector
b. Internal Revenue Service
c. Board of Equalization
d. Franchise Tax Board - correct-answer-d. Board of Equalization
How often are you required to pay sales tax?
a. monthly
b. quarterly
c. annually
d. It depends on the expected amount of sales tax. - correct-answer-b. quarterly
When balancing the accounts receivable, which of the following would have no
effect?
a. Posting to the wrong accounts-receivable account.
b. Crediting instead of debiting the accounts-receivable account.
, 4|Page
c. Debiting instead of crediting the accounts-receivable account.
d. Posting a receivable to an accounts-payable account. - correct-answer-a.
posting to the wrong accounts-receivable account.
What kind of discount do lumber yards and other suppliers offer to contractors
who pay their bills promptly?
a. 1/2% - 1%
b. 1% - 2%
c. 4% - 8%
d. 10% - 12% - correct-answer-b. 1% - 2%
If a newly hired employee does not have an SSN, what should be done?
a. The employee must apply for an SSN.
b. The employer must apply on behalf of the employee for an SSN.
c. If a W-2 is provided, an SSN is not needed.
d. Call the police. - correct-answer-a. The employee must apply for an SSN.
Once a budget is finalized, the:
a. contractor should stick to the budget no matter what happens
b. contractor should do the best possible job of staying within the budget
c. budget should be revised each month
