Business Finance – California Contractors (Law and Business), 2026 –
Study Material and Practice Questions
D. Net profit for the year - correct answer ✔✔ What is another term for net income?
A. Cash flow
B. Debits
C. Pretax income
D. Net profit for the year
A. IRS - correct answer ✔✔ Which agency can allow a company to switch their accounting
method?
A. IRS
B. BOE
C. FUTA
D. EDD
C. Guaranteeing up to 90% of a bank loan - correct answer ✔✔ The SBA prefers to provide
funds to a business by:
A. Making direct loans
B. Making direct grants
C. Guaranteeing up to 90% of a bank loan
D. The SBA does not provide funds in any way
,B. The Employment Development Department - correct answer ✔✔ With what agency is a DE34
form filed?
A. The internal Revenue Service
B. The Employment Development Department
C. Department of Industrial Relations
D. The Contractors State License Board
C. Income statement - correct answer ✔✔ Which of the following should show a profit in order
for a financial institution to easily give the company a loan?
A. Balance sheet
B. Assets account
C. Income statement
D. Overhead account
C. Intermediate term loan to be paid in 1-7 years - correct answer ✔✔ If John, a contractor,
decides to take out a loan to pay for a truck, he should obtain a:
A. Short-term loan to be paid within one year
B. Long-term loan to be pain in more than 7 years
C. Intermediate term loan to be paid in 1-7 years
D. None of the above, he should pay cash
C. Income Statement - correct answer ✔✔ Which financial statement gives a picture of the
business over a period of time?
, A. Balance Sheet
B. Statement of Cash Flow
C. Income Statement
D. Shareholder's Equity
C. Internal Revenue Service - correct answer ✔✔ Employers must report and pay federal
unemployment (FUTA) tax to which agency?
A. State Board of Equalization
B. Contractors State License Board
C. Internal Revenue Service
D. Franchise Tax Board
B. Accelerated depreciation - correct answer ✔✔ Which of the following depreciation methods
allows a contractor to depreciate the significant amount of an item in the first year?
A. Straight line depreciation
B. Accelerated depreciation
C. Intermittent depreciation
D. The IRS has discontinued this practice
A. Contract documents - correct answer ✔✔ What information should a job filing system
contain?
A. Contract documents
B. Balance sheet
C. List of office expenses
Study Material and Practice Questions
D. Net profit for the year - correct answer ✔✔ What is another term for net income?
A. Cash flow
B. Debits
C. Pretax income
D. Net profit for the year
A. IRS - correct answer ✔✔ Which agency can allow a company to switch their accounting
method?
A. IRS
B. BOE
C. FUTA
D. EDD
C. Guaranteeing up to 90% of a bank loan - correct answer ✔✔ The SBA prefers to provide
funds to a business by:
A. Making direct loans
B. Making direct grants
C. Guaranteeing up to 90% of a bank loan
D. The SBA does not provide funds in any way
,B. The Employment Development Department - correct answer ✔✔ With what agency is a DE34
form filed?
A. The internal Revenue Service
B. The Employment Development Department
C. Department of Industrial Relations
D. The Contractors State License Board
C. Income statement - correct answer ✔✔ Which of the following should show a profit in order
for a financial institution to easily give the company a loan?
A. Balance sheet
B. Assets account
C. Income statement
D. Overhead account
C. Intermediate term loan to be paid in 1-7 years - correct answer ✔✔ If John, a contractor,
decides to take out a loan to pay for a truck, he should obtain a:
A. Short-term loan to be paid within one year
B. Long-term loan to be pain in more than 7 years
C. Intermediate term loan to be paid in 1-7 years
D. None of the above, he should pay cash
C. Income Statement - correct answer ✔✔ Which financial statement gives a picture of the
business over a period of time?
, A. Balance Sheet
B. Statement of Cash Flow
C. Income Statement
D. Shareholder's Equity
C. Internal Revenue Service - correct answer ✔✔ Employers must report and pay federal
unemployment (FUTA) tax to which agency?
A. State Board of Equalization
B. Contractors State License Board
C. Internal Revenue Service
D. Franchise Tax Board
B. Accelerated depreciation - correct answer ✔✔ Which of the following depreciation methods
allows a contractor to depreciate the significant amount of an item in the first year?
A. Straight line depreciation
B. Accelerated depreciation
C. Intermittent depreciation
D. The IRS has discontinued this practice
A. Contract documents - correct answer ✔✔ What information should a job filing system
contain?
A. Contract documents
B. Balance sheet
C. List of office expenses
