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Louisiana Contractor’s Exam – Business and Law
Practice Test | Latest Update | Study Guide &
Exam Prep
1. When a contractor uses the completed contract method of accounting, when are revenues and
expenses recognized on the financial statements?
A) When the contract is signed
B) When the project is substantially complete
C) When progress payments are received
D) When the project is fully completed and accepted
2. A contractor who fails to renew their license before the expiration date must wait how long
before they can reapply for licensure?
A) 30 days
B) 60 days
C) One year
D) 90 days
3. Under Louisiana law, a home improvement contract must contain which of the following
provisions to be legally enforceable?
A) Arbitration clause
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B) Written contract signed by both parties
C) Notary public signature
D) Attorney review stamp
4. The statute of limitations for filing a construction defect lawsuit in Louisiana is generally how
many years from the date of substantial completion?
A) 3 years
B) 5 years
C) 10 years
D) 7 years
5. When calculating a company's quick ratio, which of the following assets would be excluded
from the calculation?
A) Cash
B) Marketable securities
C) Accounts receivable
D) Inventory
6. A contractor who uses the cash basis accounting method must recognize income when which
event occurs?
A) When services are performed
B) When payment is actually received
C) When the invoice is generated
D) When the project reaches 50% completion
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7. The Louisiana State Licensing Board for Contractors has the authority to do all of the
following EXCEPT which action?
A) Issue fines for unlicensed work
B) Criminal prosecution of unlicensed contractors
C) Suspend or revoke licenses
D) Conduct investigations of complaints
8. If a contractor is working on a project valued at $25,000 for a homeowner's primary residence,
what type of license is required?
A) Commercial contractor license
B) Home improvement registration
C) General contractor license
D) Specialty contractor license
9. The maximum percentage of retainage that can be withheld from a contractor on a public
project in Louisiana is limited to what amount?
A) 5%
B) 10%
C) 15%
D) 25%
10. Which of the following would be considered an example of direct labor cost in construction
estimating?
A) Project manager salary
B) Carpenter's hourly wage while framing
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C) Office staff wages
D) Equipment operator training time
11. When a contractor receives a notice of intent to file a lien, how many days does the
contractor typically have to respond or resolve the issue before the lien is actually filed?
A) 15 days
B) 30 days
C) 45 days
D) 60 days
12. The Occupational Safety and Health Administration requires employers to report any work-
related fatality to the nearest OSHA office within what time frame?
A) 4 hours
B) 8 hours
C) 12 hours
D) 24 hours
13. Which type of contract allows the owner to pay the contractor for actual costs plus a
predetermined fee regardless of the final project cost?
A) Lump sum contract
B) Cost-plus contract
C) Unit price contract
D) Fixed fee contract
14. A contractor who wishes to challenge a decision made by the Louisiana State Licensing
Board must file an appeal within how many days of receiving the board's decision?
Louisiana Contractor’s Exam – Business and Law
Practice Test | Latest Update | Study Guide &
Exam Prep
1. When a contractor uses the completed contract method of accounting, when are revenues and
expenses recognized on the financial statements?
A) When the contract is signed
B) When the project is substantially complete
C) When progress payments are received
D) When the project is fully completed and accepted
2. A contractor who fails to renew their license before the expiration date must wait how long
before they can reapply for licensure?
A) 30 days
B) 60 days
C) One year
D) 90 days
3. Under Louisiana law, a home improvement contract must contain which of the following
provisions to be legally enforceable?
A) Arbitration clause
,2|Page
B) Written contract signed by both parties
C) Notary public signature
D) Attorney review stamp
4. The statute of limitations for filing a construction defect lawsuit in Louisiana is generally how
many years from the date of substantial completion?
A) 3 years
B) 5 years
C) 10 years
D) 7 years
5. When calculating a company's quick ratio, which of the following assets would be excluded
from the calculation?
A) Cash
B) Marketable securities
C) Accounts receivable
D) Inventory
6. A contractor who uses the cash basis accounting method must recognize income when which
event occurs?
A) When services are performed
B) When payment is actually received
C) When the invoice is generated
D) When the project reaches 50% completion
,3|Page
7. The Louisiana State Licensing Board for Contractors has the authority to do all of the
following EXCEPT which action?
A) Issue fines for unlicensed work
B) Criminal prosecution of unlicensed contractors
C) Suspend or revoke licenses
D) Conduct investigations of complaints
8. If a contractor is working on a project valued at $25,000 for a homeowner's primary residence,
what type of license is required?
A) Commercial contractor license
B) Home improvement registration
C) General contractor license
D) Specialty contractor license
9. The maximum percentage of retainage that can be withheld from a contractor on a public
project in Louisiana is limited to what amount?
A) 5%
B) 10%
C) 15%
D) 25%
10. Which of the following would be considered an example of direct labor cost in construction
estimating?
A) Project manager salary
B) Carpenter's hourly wage while framing
, 4|Page
C) Office staff wages
D) Equipment operator training time
11. When a contractor receives a notice of intent to file a lien, how many days does the
contractor typically have to respond or resolve the issue before the lien is actually filed?
A) 15 days
B) 30 days
C) 45 days
D) 60 days
12. The Occupational Safety and Health Administration requires employers to report any work-
related fatality to the nearest OSHA office within what time frame?
A) 4 hours
B) 8 hours
C) 12 hours
D) 24 hours
13. Which type of contract allows the owner to pay the contractor for actual costs plus a
predetermined fee regardless of the final project cost?
A) Lump sum contract
B) Cost-plus contract
C) Unit price contract
D) Fixed fee contract
14. A contractor who wishes to challenge a decision made by the Louisiana State Licensing
Board must file an appeal within how many days of receiving the board's decision?
