NEVADA CONTRACTOR CMS GENERAL
BUSINESS AND LAW EXAM 150 CORRECT
VERIFIED ANSWERS WITH RATIONALES
GRADE A+ / INSTANT DOWNLOAD
Nevada CMS Practice Exam
Question 1
According to the Nevada State Contractors Board (NSCB) rules, a
licensed contractor must notify the Board in writing of any change of
address or change in personnel within how many days of the change?
A. 10 days
B. 15 days
C. 30 days
D. 45 days
Correct Answer: C. 30 days
Rationale: Nevada Revised Statutes (NRS) requires licensees to
report changes in business address, name, or personnel to the Board
within 30 days.
Question 2
If a licensed contractor hires an unlicensed subcontractor to perform
structural framing work valued at $15,000, which of the following
disciplinary actions is the Prime Contractor most immediately subject to
by the NSCB?
A. A mandatory 1-year suspension of their license and a $500 fine
B. Administrative fines, public reprimand, and potential revocation of
the contractor's license
C. No disciplinary action as long as the prime contractor oversees the
final work
D. A automatic downgrade of their monetary license limit by 50%
Correct Answer: B. Administrative fines, public reprimand,
and potential revocation of the contractor's license
Rationale: Hiring an unlicensed subcontractor is a severe violation of
,Nevada contracting law, exposing the primary licensee to heavy
administrative fines, suspension, or total revocation.
Question 3
Under Nevada mechanics' lien laws, a Prime Contractor must record a
Notice of Lien in the county recorder's office within how many days after
the completion of the work of improvement if no Notice of Completion
was recorded?
A. 30 days
B. 60 days
C. 90 days
D. 120 days
Correct Answer: C. 90 days
Rationale: If no Notice of Completion is officially filed, the statutory
timeline allows a prime contractor up to 90 days from actual
completion to record their mechanics' lien.
Question 4
A Nevada residential contractor enters into a home improvement
contract. By law, what is the maximum amount that the contractor can
legally request as a down payment before starting the project?
A. 10% of the total contract price or $1,000, whichever is less
B. 20% of the total contract price or $5,000, whichever is less
C. 33% of the total contract price regardless of the monetary value
D. There is no statutory limit on down payments for commercial or
residential work in Nevada
Correct Answer: A. 10% of the total contract price or
$1,000, whichever is less
Rationale: For residential pool, spa, or standard home
improvements, Nevada law restricts the upfront deposit to 10% or
$1,000, whichever figure is smaller, to protect homeowners.
Question 5
Which of the following business entities exposes an individual owner to
unlimited personal liability for all business debts, torts, and legal
judgements incurred by the construction company?
A. C-Corporation
B. Limited Liability Company (LLC)
C. Sole Proprietorship
,D. S-Corporation
Correct Answer: C. Sole Proprietorship
Rationale: A sole proprietorship does not establish a separate legal
entity, meaning the business and the individual owner are legally
identical, exposing personal assets to all business liabilities.
Question 6
Under the Fair Labor Standards Act (FLSA), an hourly construction
worker who works 48 hours during a single workweek must be
compensated at what rate for the hours exceeding 40?
A. The regular hourly rate plus a flat $5.00 hazard bonus per hour
B. Double the regular hourly rate for all 8 overtime hours
C. Not less than one and one-half times the regular hourly rate
D. The standard regular rate since construction is exempt from federal
overtime mandates
Correct Answer: C. Not less than one and one-half times the
regular hourly rate
Rationale: The FLSA mandates that non-exempt hourly employees
receive overtime pay at a rate of 1.5 times their regular pay rate for
any hours worked beyond 40 in a single standard workweek.
Question 7
In Nevada, a contractor's monetary license limit is established by the
NSCB based on several financial metrics. Which financial statement
element represents total assets minus total liabilities?
A. Net Working Capital
B. Gross Revenue
C. Net Worth (Owner's Equity)
D. Operating Cash Flow
Correct Answer: C. Net Worth (Owner's Equity)
Rationale: Net worth, also termed equity, represents the net value
remaining after all liabilities are subtracted from total business assets.
Question 8
According to OSHA standards for excavation and trenching, what is the
maximum depth a trench can be dug before an employer must provide
an approved protective system, such as sloping, benching, or shoring?
A. 3 feet
B. 4 feet
, C. 5 feet
D. 7 feet
Correct Answer: C. 5 feet
Rationale: OSHA requires trench protection systems for excavations
5 feet or deeper, unless the excavation is made entirely in stable rock.
Question 9
A contractor is evaluating their financial balance sheet. If the company
has Current Assets of $150,000 and Current Liabilities of $90,000, what
is the company's Net Working Capital?
A. $240,000
B. $1.66 Ratio
C. $60,000
D. $90,000
Correct Answer: C. $60,000
Rationale: Net Working Capital is calculated by subtracting Current
Liabilities from Current Assets ($150,000 - $90,000 = $60,000).
Question 10
Under Nevada law, if a contractor changes their Qualified Employee (the
person who took the exam to qualify the license), the licensee must find a
replacement and qualify them within how many days?
A. 10 days
B. 30 days
C. 60 days
D. 120 days
Correct Answer: C. 60 days
Rationale: If the qualified person leaves the license, the contractor
must replace them within 60 days or face the automatic suspension of
their license.
Question 11
Which Federal tax form must a contractor distribute to independent
subcontractors who were paid $600 or more for services rendered
during the calendar tax year?
A. Form W-2
B. Form 1099-NEC
C. Form 941
D. Form W-4
BUSINESS AND LAW EXAM 150 CORRECT
VERIFIED ANSWERS WITH RATIONALES
GRADE A+ / INSTANT DOWNLOAD
Nevada CMS Practice Exam
Question 1
According to the Nevada State Contractors Board (NSCB) rules, a
licensed contractor must notify the Board in writing of any change of
address or change in personnel within how many days of the change?
A. 10 days
B. 15 days
C. 30 days
D. 45 days
Correct Answer: C. 30 days
Rationale: Nevada Revised Statutes (NRS) requires licensees to
report changes in business address, name, or personnel to the Board
within 30 days.
Question 2
If a licensed contractor hires an unlicensed subcontractor to perform
structural framing work valued at $15,000, which of the following
disciplinary actions is the Prime Contractor most immediately subject to
by the NSCB?
A. A mandatory 1-year suspension of their license and a $500 fine
B. Administrative fines, public reprimand, and potential revocation of
the contractor's license
C. No disciplinary action as long as the prime contractor oversees the
final work
D. A automatic downgrade of their monetary license limit by 50%
Correct Answer: B. Administrative fines, public reprimand,
and potential revocation of the contractor's license
Rationale: Hiring an unlicensed subcontractor is a severe violation of
,Nevada contracting law, exposing the primary licensee to heavy
administrative fines, suspension, or total revocation.
Question 3
Under Nevada mechanics' lien laws, a Prime Contractor must record a
Notice of Lien in the county recorder's office within how many days after
the completion of the work of improvement if no Notice of Completion
was recorded?
A. 30 days
B. 60 days
C. 90 days
D. 120 days
Correct Answer: C. 90 days
Rationale: If no Notice of Completion is officially filed, the statutory
timeline allows a prime contractor up to 90 days from actual
completion to record their mechanics' lien.
Question 4
A Nevada residential contractor enters into a home improvement
contract. By law, what is the maximum amount that the contractor can
legally request as a down payment before starting the project?
A. 10% of the total contract price or $1,000, whichever is less
B. 20% of the total contract price or $5,000, whichever is less
C. 33% of the total contract price regardless of the monetary value
D. There is no statutory limit on down payments for commercial or
residential work in Nevada
Correct Answer: A. 10% of the total contract price or
$1,000, whichever is less
Rationale: For residential pool, spa, or standard home
improvements, Nevada law restricts the upfront deposit to 10% or
$1,000, whichever figure is smaller, to protect homeowners.
Question 5
Which of the following business entities exposes an individual owner to
unlimited personal liability for all business debts, torts, and legal
judgements incurred by the construction company?
A. C-Corporation
B. Limited Liability Company (LLC)
C. Sole Proprietorship
,D. S-Corporation
Correct Answer: C. Sole Proprietorship
Rationale: A sole proprietorship does not establish a separate legal
entity, meaning the business and the individual owner are legally
identical, exposing personal assets to all business liabilities.
Question 6
Under the Fair Labor Standards Act (FLSA), an hourly construction
worker who works 48 hours during a single workweek must be
compensated at what rate for the hours exceeding 40?
A. The regular hourly rate plus a flat $5.00 hazard bonus per hour
B. Double the regular hourly rate for all 8 overtime hours
C. Not less than one and one-half times the regular hourly rate
D. The standard regular rate since construction is exempt from federal
overtime mandates
Correct Answer: C. Not less than one and one-half times the
regular hourly rate
Rationale: The FLSA mandates that non-exempt hourly employees
receive overtime pay at a rate of 1.5 times their regular pay rate for
any hours worked beyond 40 in a single standard workweek.
Question 7
In Nevada, a contractor's monetary license limit is established by the
NSCB based on several financial metrics. Which financial statement
element represents total assets minus total liabilities?
A. Net Working Capital
B. Gross Revenue
C. Net Worth (Owner's Equity)
D. Operating Cash Flow
Correct Answer: C. Net Worth (Owner's Equity)
Rationale: Net worth, also termed equity, represents the net value
remaining after all liabilities are subtracted from total business assets.
Question 8
According to OSHA standards for excavation and trenching, what is the
maximum depth a trench can be dug before an employer must provide
an approved protective system, such as sloping, benching, or shoring?
A. 3 feet
B. 4 feet
, C. 5 feet
D. 7 feet
Correct Answer: C. 5 feet
Rationale: OSHA requires trench protection systems for excavations
5 feet or deeper, unless the excavation is made entirely in stable rock.
Question 9
A contractor is evaluating their financial balance sheet. If the company
has Current Assets of $150,000 and Current Liabilities of $90,000, what
is the company's Net Working Capital?
A. $240,000
B. $1.66 Ratio
C. $60,000
D. $90,000
Correct Answer: C. $60,000
Rationale: Net Working Capital is calculated by subtracting Current
Liabilities from Current Assets ($150,000 - $90,000 = $60,000).
Question 10
Under Nevada law, if a contractor changes their Qualified Employee (the
person who took the exam to qualify the license), the licensee must find a
replacement and qualify them within how many days?
A. 10 days
B. 30 days
C. 60 days
D. 120 days
Correct Answer: C. 60 days
Rationale: If the qualified person leaves the license, the contractor
must replace them within 60 days or face the automatic suspension of
their license.
Question 11
Which Federal tax form must a contractor distribute to independent
subcontractors who were paid $600 or more for services rendered
during the calendar tax year?
A. Form W-2
B. Form 1099-NEC
C. Form 941
D. Form W-4
