CONTRACTOR LICENSE EXAM WITH CORRECT ANSWERS GRADED A+

Does home improvement include work done on an individual condominium unit? - correct answer Yes Does home improvement include work done on a swimming pool? - correct answer Yes Does a home improvement contract HAVE to be in writing in order to preserve your lien rights? - correct answer Yes A county or municipality in Maryland _____________ require a contractor to get authorization from an official in that city to be able to contract in that municipality. - correct answer Cannot A county or municipality in Maryland _______________ regulate the character, performance and quality of home improvement. - correct answer Can How many members are there in the Maryland Home Improvement Commission? - correct answer 9 Of the 9 members on the Commission, how many are experienced in home improvement? - correct answer 4 What is the term of a member on the Commission? - correct answer 4 yrs. How long must a person be a citizen and member of Maryland before they can be appointed to the Commission? - correct answer 5 yrs. It is illegal for a member of the Commission to receive any compensation from a person regulated by the Commission. - correct answer True How often does the Commission hold meetings at a minimum? - correct answer 6 times a year The _______________ is a full time employee of the State. - correct answer Executive Director People hired to investigate complaints about home improvement projects work under: - correct answer the Director of the Commission If the Commission decides to sue a contractor because they believe that the contractor has or will cause harm to another person, they can sue for: - correct answer -injunctive relief against the conduct, -an order for satisfactory completion of the project, -restitution. Can the Commission request financial records at any time? - correct answer Yes The following are exempt from licensure requirements: - correct answer -employees for labor services -employees for clerical work What is the minimum amount of liability insurance needed? - correct answer $50,000 An applicant for licensure must have 2 years trade experience or comparable educational training. - correct answer True The Commission can ask an applicant for information about the applicant's... - correct answer -character -experience -financial stability The financial information provided by an applicant is public information. - correct answer No If an application for a license is denied, the applicant can request a hearing within ______________ after the notice of denial is mailed. - correct answer 10 days A salesperson will not be issued a license until the salesperson becomes employed or contractually involved with a licensed contractor. - correct answer True How many contractors may a salesperson represent? - correct answer 2 Jim Smith is a Sales Representative for ABC Construction. Can he accept a position as a Sales Representative for Top Notch Construction without first informing ABC Construction of his intentions and also informing Top Notch Construction of his existing situation with ABC Construction? - correct answer No When a sales person is no longer associated with a company they represented, the contractor must: - correct answer give the commission written notice The Commission may suspend or revoke a license if the licensee: - correct answer -lies on their application -practices fraud while being licensed -is convicted of a felony Licensed Home Improvement Contractors are also required to hold a construction license issued by the Clerk of the Court under Title 17. - correct answer False Home owners have a right to bring a claim against the Guaranty Fund for situations of _________________________ concerning restoration, repair, replacement or completion that arise from unworkmanlike, inadequate, or incomplete home improvement. - correct answer actual loss What is the maximum amount of money the Commission will award to any one claimant from the Guaranty Fund? - correct answer $20,000.00 What is the maximum amount of money the Commission will pay out of the fund concerning the affairs of any one contractor? - correct answer $100,000.00 Can a person bring a claim against the Guaranty Fund in a contract he has with the employer of his son? - correct answer No How long does a claimant have to bring a claim against the Guaranty Fund? - correct answer 3 years from discovery of the loss or damage How many days does a contractor have to respond in writing to the copy of a claim that was sent by the Commission? - correct answer 10 days If within ____________ after the Commission gives notice, a contractor on whose account a claim was paid does not reimburse the fund in full, the Commission may sue the contractor for reimbursement. - correct answer 60 days In addition to full reimbursement of the fund, a contractor is responsible to pay at least ___________ interest on the amount to reimburse. - correct answer 10 percent The state can record a lien against any real property owned by the contractor for a debt owed to the fund. - correct answer True If the Commission pays a claim from the Fund based on the actions or omissions of a contractor, the Commission may suspend the contractor's license until full reimbursement of the Fund plus at least 10% interest. - correct answer True A home improvement contract in compliance with the home improvement laws would include all of the following except: - correct answer Names and license numbers of subcontractors A salesperson may not represent 2 contractors at the same time for the same project. - correct answer True Can a salesperson legally accept money for themselves from the customer? - correct answer No It is against the law for building and permits departments to issue a permit to a contractor without the contractor's license number. - correct answer True If a contractor fails to correct a violation of the building code within a reasonable time period, the county or municipality inspecting the project shall notify the Commission. - correct answer True What is the maximum fine for contracting without a license - second offense? - correct answer $5,000 and/or 2 years in jail or both Contractor, Jack Smith, is not getting along with Hector Jones, his customer. If he decides not to complete the contract, has Jack broken any law? - correct answer Yes Can a contractor decide to use a material other than specified in the contract documents without getting permission from the owner? - correct answer No Contractors may not: - correct answer -misrepresent their service or product -make false promises -lie on their license application Contractor, Jack Brown, makes a deal with customer, Ameal Cougar, to provide an estimate of $40,000 on a project where the actual costs are $30,000, allowing Ameal to pocket $10,000 after securing a mortgage at $40,000 and paying off Jack. This is: - correct answer -fraud -an illegal act -a misdemeanor If a contractor's salesperson stops selling or working with the contractor for any reason, the contractor has a responsibility to the State to inform the Commission. - correct answer True All advertising has to provide the identifier "Maryland Home Improvement Commission License No ______________" or "MHIC#__________". - correct answer True What is the maximum penalty the Commission may impose upon a contractor, licensed or unlicensed, per violation of these laws: - correct answer $5,000 Advertising must be done in a way as to avoid misrepresenting the product, service or terms of sale so as not to deceive the customer. - correct answer True An applicant must provide to the Commission, a credit report with their application. - correct answer True How many days does a contractor have to respond to a receipt of a claim from the commission? Close - correct answer 10 days Close If a contract was agreed to and signed by both parties for the purchase of replacement windows at a trade show, would this sale be subject to the laws of the Door-to-Door Sales Act? - correct answer Yes If a consumer, by phone, contacted a roofing company and asked for a bid for their home, and the contract is signed at the home of the consumer without ever going to the office of the roofing company, is this sale subject to the laws of the Door-to-Door Sales Act? - correct answer Yes Can a buyer waive his right to cancel a contract that falls into the category of "emergency situations?" - correct answer Yes When a buyer initiates the contact and requests a contractor to visit the home to make a repair or perform maintenance, is this sale to repair or maintain this home subject to the Door-to-Door Sales Act? - correct answer No If a customer made a purchase entirely over the phone or by mail, would this sales be subject to the Door-to-Door Sales Act? - correct answer No Contractors cannot fail to provide a copy of the contract entered into between the contractor and this customer at the time this contract is executed. - correct answer True The contract or sales receipt must inform the buyer in BOLDFACE TYPE a minimum size of __________ points in the area where their signature is required on the document that "You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction." - correct answer 10 points Where applicable, contractors must provide to their customers the form titled, ________________________ at the time of the sale. - correct answer Notice of Cancellation If a customer cancels their transaction with you, how long do you have to return property traded in and money exchanged? - correct answer 10 business days If a customer cancels their transaction with you and agrees to ship the purchased item back to the seller, who pays for the shipping? - correct answer the seller If a customer makes the goods available to the seller at their residence and the seller does not pick them up, at what point does the customer get to keep the goods? - correct answer 20 days The "Notice of Cancellation" that must be provided to the buyer at the time of the sale must be complete and in duplicate providing: - correct answer -Name of Seller -Address of place of business -Date of transaction and the date not earlier than the third business day following the transaction that the customer can cancel. A seller, by law, has to, at the time of sale, orally explain to the customer of their right to cancel. - correct answer True What are the possible repercussions of violating the Door-to-Door Sales Act laws? - correct answer -Repayment of any damages plus paying the customer's attorney's fees -Guilty of a misdemeanor -Can be fixed $1,000 fine or 1 year in jail or both Door-to-Door Sales Act applies to sales, lease or rental of consumer goods or services under single or multiple contracts with a purchase price of ____________ or more. Close - correct answer $25.00 __________ are used to monitor and evaluate a contractor's costs during the course of a construction project. - correct answer Cost codes Is profit considered a cost? And should it be factored into your cost codes? - correct answer No Which of the following are benefits of using estimating software? - correct answer -professional looking reports -alleviate many errors -reference databases Profit is the amount of money left over after a project is 100 percent complete, and referred to as net, or clear profit. - correct answer True Items not specified in the project plans, such as plumbing fixtures, electrical fixtures, flooring.... can be handled by negotiating a budget for these items not yet decided upon. These additional monies set aside for the owner to go shopping with are called? - correct answer allowances The cost of having employees includes their hourly wage, and other expenses not included in their wage such as, matching Social Security and Medicare contributions and unemployment and workers compensation expenses. These additional costs, over and above wages is called _________________. - correct answer labor burden Requiring bidders to include qualifications in a bid helps to ensure _________ . - correct answer -competence -capacity -experience An excavation project requires the removal and hauling of an undetermined amount of fill material. Since the amount of work is not defined, the contractor quotes a certain amount per cubic yard on the bid form. This amount incudes equipment rental and maintenance costs, labor costs, fixed overhead costs and profit. This is an example of what type of estimate? - correct answer unit price estimate When using subcontractors, be sure to clearly describe the level of quality expected in their job specifications, this will help them _____ the job accordingly. - correct answer bid Temporary storage facilities, dumpsters and utilities are considered _________ overhead. - correct answer project Indirect labor costs like taxes and insurance are sometimes referred to as ______________________________. - correct answer Labor Burden A contractor should not only consider the costs of equipment needed to build the project, whether owned or rented, but also the operating/maintenance expenses, repair of, storage, delivery, finance cost, insurance, and taxes. - correct answer true When adding profit to an estimate, the value is usually ___________________________. - correct answer A percentage of the total job cost What are the first steps in completing an estimate? - correct answer -Review project documents -Conduct environmental assessments -Inspect the job site Unit price estimates consist of assigning costs to each separate unit of construction. - correct answer true A complete list of all of the materials and items of work that would be required to complete a project are __________________ . - correct answer quantity surveys (take off) It is always wise to choose the subcontractor who provides the lowest bid. - correct answer false What would be the best source to use when estimating job site overhead? - correct answer Historical job site overhead costs records Recognizing that delays are inevitable, the schedule should plan for this by considering ____________________. - correct answer Contingency time Adding an amount of money to cover unexpected costs are ______________________. - correct answer Contingency costs ______________________are reasonable estimates of funds set aside for a particular item in a project (such as lighting fixtures). The contractor is not held to that price. - correct answer allowances The basic hourly wage incurred while an employee is being productive in the building process is known as ______________________________________. - correct answer Direct labor cost An advantage to renting equipment can be __________ . - correct answer -short term need -distant job location -no maintenance costs This is a form of construction estimating in which a fixed price is given for the entire project. - correct answer lump sum method The importance of pre-qualified bids is to ensure ___________ . - correct answer -competence -capacity -experience Quality of construction, materials and work methods should be addressed in the specifications. Companies that are bidding can take these expectations into consideration when they are doing their estimates. - correct answer True Which of the following is not considered annual company overhead? - correct answer equipment rental Lack of ________ definition could lead to a skewed bid and could result in the contractor actually losing money on a project. Close - correct answer -design -work scope When interviewing a person for employment, is it legal to ask them about their mental health history? - correct answer No Employers are required to report a new employee or rehired employee to the State Directory of New Hires. - correct answer True What Federal form are employers required to complete within 3 days of their hire for the U.S. Customs and Immigrations Service? - correct answer I-9 What Federal law provides employers with their minimum wage and overtime requirements? - correct answer Fair Labor Standard Act Do employers have to pay overtime pay to employee who works on a holiday? - correct answer No The Wage Garnishment Law prohibits an employer from firing an employee whose pay is garnished for payment of a single debt. - correct answer True What is the purpose of New Hire Reporting? - correct answer -to detect benefits fraud -to enforce child support orders Employers in Maryland are required to report their payroll and pay unemployment insurance taxes on their ________________ . - correct answer Quarterly Contribution Report How many employees must an employer have before they are required to purchase Workers Compensation Insurance? - correct answer 1 What benefit is provided to an injured employee if needed? - correct answer -Wage replacement and payment for loss or permanent damage to body parts -Rehabilitation costs -Current and future medical costs What is the penalty for not providing Workers Compensation Insurance to your employee(s)? - correct answer Up to $5000 fine, imprisoned for one year, or both What governmental department in Maryland administers the Laws for Unemployment? - correct answer Department of Labor, Licensing and Regulation After how many days of conducting business with an employee is an employer in violation of the law if they have not yet registered for Unemployment Insurance? - correct answer 20 days Which of the following rates is for unemployment insurance that is the average rate paid by all employers over the last five years? - correct answer New Account Rate Can an employer legally pay an hourly wage earner only once a month? - correct answer No Can an employer, as a form of disciplinary action, legally doc an employee's earned wage? - correct answer No After working more than 40 hours in a seven day week, employees in the building trades would be paid 1 1/2 times their usually hourly pay for those hours over 40. - correct answer True In the absence of an express contract, employees may be hired or fired for almost any reason - whether fair or not - or for no reason at all. - correct answer True Can an employer legally require an employee to be tested for the illegal use of drugs and alcohol? - correct answer Yes What is the minimum age at which a minor can be gainfully employed? - correct answer 14 Minors between 14 and 17, in order to be gainfully employed, must have a work permit. Close - correct answer True An owner must be notified of the possibility of a lien being perfected against their property within ____________ days after doing the work or furnishing the materials. - correct answer 120 days Subcontractors must inform an owner of their intent to lien by: - correct answer -Serving a Notice to Owner by Subcontractor -Posting the Form of Notice on the front door What method of providing the owner the "Form of Notice" is acceptable? - correct answer -Certified Mail -Registered Mail -Personal Hand Delivery If a property has more than one owner, a subcontractor would need to formally notify each owner with "Form of Notice". - correct answer False If, on the account of absence, the owner is not able to be contacted, the "Form of Notice" can be posted on the front door or front of the building, but with this method there has to be a witness to the posting. - correct answer True A Prime Contractor is in default in paying a Subcontractor. The Subcontractor serves the owner "Form of Notice". The owner, after checking payment records to the Prime Contractor, finds that monies due to this Subcontractor were in fact provided to the Prime Contractor to be disbursed to this Subcontractor. At this point, is it legal for the owner to withhold from the Prime Contractor, the amount needed to pay this claim from future payments still needed to complete the contract with the Prime Contractor? - correct answer Yes An owner receives notice of an order to attach a lien against his property. How long does the owner have to show cause as to why a lien shouldn't be attached? - correct answer 15 days From the date that a contractor or other entitled person petitions to establish a lien at the circuit court, how long does the contractor have to enforce the lien? - correct answer 1 year Anyone seeking to claim a lien must file a petition in the circuit court within __________ after the work has been finished or materials furnished. - correct answer 180 days At the time of project closeout the contractor must provide to the owner a signed release of lien from each material provider and each subcontractor involved in the project. Close - correct answer True Who is responsible for Maryland's Occupational Safety and Health Plan (MOSH)? - correct answer The Division of Labor and Industry MOSH suggests that all effective safety and health programs have 5 elements: 1) Management commitment and employee involvement; 2) Work-site inspection and analysis; 3) Hazard prevention and control; 4) Safety and health training; and - correct answer long term commitment by employer This form is a log of work related injuries and illnesses: - correct answer OSHA 300 Maryland requires that employers obtain ____________________ for each hazardous chemical material that is kept on hand, produced or imported. - correct answer Safety Data Sheets The law requires employers to obtain, maintain and submit certain information about the hazardous substances in their work places. This applies to all employers. - correct answer True Are MOSH inspectors permitted to conduct an inspection without advanced warning to the employer? - correct answer Yes If an injury only requires first aid, would that incident need to be recorded? - correct answer No The purpose of a/an _________ is to provide detailed information on each hazardous chemical at the job site, informing employees of potential dangers. - correct answer SDS (Safety Data Sheets) Which is NOT an employer's right regarding an OSHA inspections? - correct answer Which is NOT an employer's right regarding an OSHA inspections? What information about hazardous chemicals is NOT found on an SDS? - correct answer Effective and ineffective protective measures. An OSHA compliance officer would be most likely to check which of the following: - correct answer whether tennis shoes are being worn by the workers Does an employer have the right to correct violations during an OSHA inspection, hoping to lessen the penalty? - correct answer Yes Companies with fewer than 10 employees are not required to prepare a written hazard communication program, even though hazardous chemicals are being used. - correct answer False Employers must post OSHA posters in a conspicuous place. - correct answer True OSHA records must be kept by the employer for at least ____ years following the year to which they pertain. Exposure and medical records must be kept for_____ years. - correct answer 5 and 30 These are violations committed with an intentional disregard of, or plain indifference to the requirement of the OSHA regulations. The initial penalty is a minimum of $5,000 and a maximum of $70,000. - correct answer Willful Which of the following is NOT a hazardous waste? - correct answer cardboard Under the RRP rule, beginning in April of 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child-care facilities and schools built before ______ , must be certified and must follow specific work practices to prevent lead contamination. - correct answer 1978 Construction sites with _________ acre or more of disturbed soil must obtain a General Permit NPDES Stormwater Discharge Permit. - correct answer one Which of the following is NOT considered a satisfactory method of safety training? - correct answer Provide written handouts Employers must report to OSHA within _______ any accident that results in either a fatality or an in-patient hospitalization of 3 or more employees. - correct answer 8 hours If asbestos is present at a job site, you must submit a written Notice of Intent __________ before starting work to the state and to the regional EPA office. - correct answer 10 days A landfill permit is required for any and all types of construction waste. - correct answer False Underground storage tanks are defined as any tank, or system connected to the tank, that has at least _____% of its volume underground. - correct answer 10% "Minor repair and maintenance" is defined as any disruption of 6 square feet or less of painted interior surface or 20 square feet or less of painted exterior surface. Close - correct answer True One pitfall of a General Partnership is that each partner is personally responsible for the debts of the business, and this debt responsibility is not limited to the percentage of ownership. - correct answer True If a corporation is eligible to be taxed as a partnership and chooses to take this option, it is referred to as ___________________. - correct answer "S" Corporation Which business organization is regulated the least by the government? - correct answer Sole Proprietorship In a general partnership, each partner is liable for the debt of the company up to the percentage of the company they own. - correct answer False What business organization provides the most financial protection for the owners? - correct answer Corporation Sole Proprietorships can issue and sell stock in the company to raise capital. - correct answer False Can a corporation actually be listed as the sole owner of a property? - correct answer Yes Limited Liability Companies have the ability to be passed down to family members when an owner (member) dies. - correct answer False Sub Chapter "S" Corporations can retain their status no matter how many stockholders they have. - correct answer False If you are naming the Sole Proprietorship something other than your real name, you will need to register the trade name with the: - correct answer MD Department of Assessments and Taxation A _____________ is when two or more contracting firms unite their forces to construct a particular project. Close - correct answer Joint Venture Close What type of insurance will protect the contractor for losses due to a fire on his construction project? - correct answer All Risk Builders insurance General liability insurance will protect the contractor against claims brought by third parties who are not employed by the contractor. - correct answer true Who pays for workers' compensation insurance? - correct answer the employer A guarantee that a contractor will pay certain subcontractors, laborers, and material suppliers associated with the project would be known as a____________. - correct answer payment bond Any monies paid out by a surety company will need to be paid back. - correct answer True Equipment in transit, on the premises or at the job site, would typically be covered by: - correct answer Equipment floater policy A Performance Bond guarantees that the contractor will complete the project according to the contract plans and terms. - correct answer true The __________ requires that federal projects valued over $100,000 must produce a performance bond to guarantee completion of the project under the terms of the contract. - correct answer Miller Act Liability Insurance on employees provides coverage over and above worker's compensation insurance in case of injury or death of an employee. - correct answer True Prime contractors should verify that their subcontractors have secured their own insurance for general liability and workers compensation. - correct answer true Can a prime contractor be held liable for a subcontractor whose employee is claiming workers compensation benefits if the subcontractor was uninsured? - correct answer yes A bond that insures that the activities on a construction project are the same as the intended activities for which the permit was granted is called a ______________ . Close - correct answer Permit Bond Which is NOT true about project scheduling? - correct answer Project schedules are only required on major projects. Adding __________time is a method of allotting more time in the project schedule to account for unforeseen delays. - correct answer contingency Project managers rely on information provided by ____________to effectively schedule their projects: - correct answer -subcontractors -records of similar past projects What are the steps involved in closing out each project? - correct answer -Onsite walk-through to develop a punch list -Contractor/architect provide certificate -Owner makes final payment This chart graphs the starting and finishing times for individual tasks that make up the project. - correct answer -bar chart -Gantt chart Contingency time is providing extra time in the schedule for unforeseen delays. - correct answer True When using subcontractors, be sure to clearly describe the level of quality expected in their job specifications, this will help them _____ the job accordingly. - correct answer bid In a construction project, _________ time is the amount of time that a task in a project network or path can be delayed without causing a delay to other, subsequent tasks or to the overall completion date. - correct answer float ______________ is a form of managing tasks that is best for simple, less complicated projects. It enables the contractor to link specific tasks to a date, manage deliveries, payments and employment schedules in a very simple, straightforward way. - correct answer Calendar scheduling The typical duties of the _______________ include; coordination activities of subcontractors and workers, enforcement of safety regulations, adjusting schedules to work around unexpected delays, overseeing general quality control and building code compliance. - correct answer superintendent The ____________ assists the superintendent by; training employees, arrange for material and equipment deliveries, develop crew assignments and schedules, and report progress to the supervisor. - correct answer foreman Most construction companies require their site superintendent to fill out a ____________ listing the activities of each work day's events. - correct answer daily report _______________ is a procedure that analyzes the requirements of a project and determines how best to decrease costs, increase profits, improve quality and performance, and enhance customer satisfaction. - correct answer Value engineering A preliminary cash flow schedule will help the project manager to understand when and to whom monies will be disbursed. - correct answer True ___________________ is crucial in maintaining a successful business. - correct answer Organization A system of recording and summarizing business and financial transactions is called _______________. - correct answer accounting A company's cash, accounts receivable, inventory, notes receivable and prepaid expenses are examples of ______________________. - correct answer current assets Notes payable, accounts payable, unpaid wages and taxes due are all examples of ___________________________. - correct answer Current Liaibilities If a business has Current Assets of $500,000 and Current Liabilities of $250,000, what is the Net Working Capital of the business? - correct answer $250,000 The financial statement that shows the financial status of a company at a specific date is called the __________________. - correct answer Balance Sheet Current Liabilities are debts that must be paid within _______________. - correct answer One year For general purposes, finanacial records should be kept for up to ________ years. - correct answer seven Accounting is based on five basic account types: - correct answer Assets, Liabilities, Equity, Income and Expenses There are three basic types of financial statements. They are: - correct answer Balance Sheet, Income Statement and Cash Flow Statement Many times a contract cannot be completed in one taxable year. the Tax Reform Act or 1986 allows you to use a different accounting method in order to estimate income. Which of the following are acceptable? - correct answer -Completed Contract Method -Percentage of Completion Method -Cost Comparison Method The Prompt Payment Act requires that prime contractors must be paid within _______ after submitting a progress payment. They must then pay their subcontractors within _____ of that money. - correct answer 14 days/7 days 2/10 prox net 30 means: - correct answer 2% discount if paid by the 10th day of the month following purchase; otherwise the entire amount is due within 30 days A ________ form is completed by the employee. It allows the employer to calculate the correct federal withholding based on an individual's filing status, withholding allowances and exemptions. - correct answer W-4 The general calculation to determine net pay is : Gross Pay - taxes withheld - deductions withheld = Net Pay Close - correct answer True When hired, every employee must provide a ______, showing how many allowances he or she is claiming. - correct answer W-4 In a _____________ , the owner pays income taxes on the net profit, generated from the business at the owner's individual tax rate. - correct answer sole proprietorship Do employees contribute to unemployment tax? - correct answer No An LLC can elect or choose to be taxed as a sole proprietorship, a partnership, or a corporation. - correct answer True Form 1099-MISC must generally be filed for each independent contractor or business entity that is not a corporation, and to which at least $_____ has been paid for services rendered in one calendar year. - correct answer $600 Social Security and Medicare taxes are paid by __________ . - correct answer both the employer and the employee Most new employers are monthly depositers for the first calendar year of their business. This means that payroll taxes must be deposited by the ____ of the month following the end of the payroll period. - correct answer the 15th day Which of the following must be held from employee wages? - correct answer -Federal Income Tax -State Income Tax -Social Security Tax You must pay self-employment taxes if your net earnings were $______ or more. - correct answer $400 A Maryland business license is required for any new business. Close - correct answer True