CALIFORNIA CONTRACTORS LAW AND BUSINESS
COMPREHENSIVE 2026 QUESTIONS AND SOLUTIONS
SCORED A+
✔✔Long term tangible property; building, land, computers - ✔✔Fixed asset
✔✔Costs that remain the same each month; office rent or a truck payment. - ✔✔Fixed
cost
✔✔Accounting Equation - ✔✔Assets = liabilities + equity
✔✔Property with a cash value that is owned by a business or individual. - ✔✔Asset
✔✔This sheet in your accounting process is the expanded version of the accounting
equation, Assets = Liabilities + Equity - ✔✔Balance Sheet
✔✔The five steps of the basic accounting cycle - ✔✔1. Gather all transactions, 2.
Record the transactions in the General Journal, 3. Post transactions on the General
Ledger, 4. Create an Income Statement for the month, 5. Create a Balance Sheet for a
period of time usually starting on Day 1.
✔✔What is cash management about? - ✔✔financial control
✔✔Why is it not advisable to let cash sit around? - ✔✔It can't increase in value.
✔✔Determining the time in which money flows out of your business is called. - ✔✔Cash
or Money Budgeting
✔✔Controlling cash movement within your company relies on this practice. It is used for
all projects currently in progress and anticipated projects. - ✔✔Job Flow Budget
✔✔This is a compilation of all the individual job flow budgets, anticipated expenses,
capital expenditures, and changes in debt position. - ✔✔Consolidated Cash Flow
Budget
✔✔A consolidated cash flow budget is usually prepared for what period of time? - ✔✔1
year
✔✔Where would you list amounts you still owe? - ✔✔Accounts Payable
✔✔Where would you list amounts due to you? - ✔✔Accounts Receivable
✔✔Name given to annual accounting period starting January 1st. - ✔✔Calendar Year
, ✔✔What is the annual accounting period starting when a company chooses? -
✔✔Fiscal Year
✔✔Accounting style that makes entries ONLY when cash changes hands. - ✔✔Cash
Basis Accounting
✔✔Accounting style that makes entries regardless of whether or not cash has actually
changed hands - ✔✔Accrual Accounting
✔✔Is accounting and bookkeeping the same thing? - ✔✔No. Bookkeeping is the
recording of financial information.
✔✔What are some examples of variable costs or expenses - ✔✔Utilities, office
supplies, materials
✔✔If your business changes from sole ownership to a partnership or vice versa, the
employment taxes should be filed as ___ _____ for that entire year. - ✔✔one business
✔✔What shows income and expenses over a period of time? - ✔✔Income statement
✔✔What shows total assets and total liabilities on a specific date? - ✔✔Balance Sheet
✔✔What is the Equity equation? - ✔✔Equity = Assets - Liabilities
✔✔What must you obtain before you can begin to hire employees? - ✔✔E.I.N.,
Employment Identification Number
✔✔Who requires and enforces the E.I.N? - ✔✔The I.R.S.
✔✔You must keep records of employment taxes for how many years? - ✔✔4 years
✔✔After you have an employee, or have paid $100 in total wages to one or more
employees; who must you register with? - ✔✔The E.D.D., Employment Development
Department
✔✔What are the three types of Federal withholding taxes? - ✔✔W4, Federal Income
Tax, W2, Federal Wage and Tax Statement, and ,I9, Employee Eligibility Verification
✔✔What State Taxes are withheld in California? - ✔✔California State Tax, Disability,
Unemployment, and Employment Training taxes.
COMPREHENSIVE 2026 QUESTIONS AND SOLUTIONS
SCORED A+
✔✔Long term tangible property; building, land, computers - ✔✔Fixed asset
✔✔Costs that remain the same each month; office rent or a truck payment. - ✔✔Fixed
cost
✔✔Accounting Equation - ✔✔Assets = liabilities + equity
✔✔Property with a cash value that is owned by a business or individual. - ✔✔Asset
✔✔This sheet in your accounting process is the expanded version of the accounting
equation, Assets = Liabilities + Equity - ✔✔Balance Sheet
✔✔The five steps of the basic accounting cycle - ✔✔1. Gather all transactions, 2.
Record the transactions in the General Journal, 3. Post transactions on the General
Ledger, 4. Create an Income Statement for the month, 5. Create a Balance Sheet for a
period of time usually starting on Day 1.
✔✔What is cash management about? - ✔✔financial control
✔✔Why is it not advisable to let cash sit around? - ✔✔It can't increase in value.
✔✔Determining the time in which money flows out of your business is called. - ✔✔Cash
or Money Budgeting
✔✔Controlling cash movement within your company relies on this practice. It is used for
all projects currently in progress and anticipated projects. - ✔✔Job Flow Budget
✔✔This is a compilation of all the individual job flow budgets, anticipated expenses,
capital expenditures, and changes in debt position. - ✔✔Consolidated Cash Flow
Budget
✔✔A consolidated cash flow budget is usually prepared for what period of time? - ✔✔1
year
✔✔Where would you list amounts you still owe? - ✔✔Accounts Payable
✔✔Where would you list amounts due to you? - ✔✔Accounts Receivable
✔✔Name given to annual accounting period starting January 1st. - ✔✔Calendar Year
, ✔✔What is the annual accounting period starting when a company chooses? -
✔✔Fiscal Year
✔✔Accounting style that makes entries ONLY when cash changes hands. - ✔✔Cash
Basis Accounting
✔✔Accounting style that makes entries regardless of whether or not cash has actually
changed hands - ✔✔Accrual Accounting
✔✔Is accounting and bookkeeping the same thing? - ✔✔No. Bookkeeping is the
recording of financial information.
✔✔What are some examples of variable costs or expenses - ✔✔Utilities, office
supplies, materials
✔✔If your business changes from sole ownership to a partnership or vice versa, the
employment taxes should be filed as ___ _____ for that entire year. - ✔✔one business
✔✔What shows income and expenses over a period of time? - ✔✔Income statement
✔✔What shows total assets and total liabilities on a specific date? - ✔✔Balance Sheet
✔✔What is the Equity equation? - ✔✔Equity = Assets - Liabilities
✔✔What must you obtain before you can begin to hire employees? - ✔✔E.I.N.,
Employment Identification Number
✔✔Who requires and enforces the E.I.N? - ✔✔The I.R.S.
✔✔You must keep records of employment taxes for how many years? - ✔✔4 years
✔✔After you have an employee, or have paid $100 in total wages to one or more
employees; who must you register with? - ✔✔The E.D.D., Employment Development
Department
✔✔What are the three types of Federal withholding taxes? - ✔✔W4, Federal Income
Tax, W2, Federal Wage and Tax Statement, and ,I9, Employee Eligibility Verification
✔✔What State Taxes are withheld in California? - ✔✔California State Tax, Disability,
Unemployment, and Employment Training taxes.
