Arizona AZ B-2 General Small
Commercial Contractor Practice
Exam | Questions, Verified
Answers & Detailed Rationales |
Complete Contractor License
Exam Prep Study Guide |
Updated 2026
1. What is the primary purpose of a construction
contract?
A. To eliminate all project risks
B. To establish the rights and obligations of the parties
C. To guarantee a contractor's profit
D. To replace the building plans
Answer: Establish the rights and obligations of the
parties
Rationale: A construction contract defines the scope of
work, payment terms, responsibilities, time
requirements, and other obligations of the owner and
contractor.
2. Which document normally describes the materials,
workmanship, and quality requirements for a project?
A. Site survey
B. Specifications
C. Change order
D. Daily log
Answer: Specifications
,Rationale: Specifications provide detailed written
requirements concerning materials, installation
methods, workmanship, testing, and quality.
3. What is the best reason for obtaining written change
orders?
A. To increase paperwork
B. To avoid paying subcontractors
C. To document changes to the original contract
D. To eliminate inspections
Answer: To document changes to the original contract
Rationale: Written change orders establish the revised
scope, price, and schedule and help prevent disputes
over authorized changes.
4. What is direct cost?
A. Office rent
B. Advertising
C. Cost directly attributable to a specific project
D. Corporate income tax
Answer: Cost directly attributable to a specific project
Rationale: Direct costs include project-specific labor,
materials, equipment, and subcontractor costs.
5. Which is generally considered an indirect or overhead
cost?
A. Concrete used on a specific project
B. Lumber installed on a project
C. Office rent
D. Masonry labor for a project
Answer: Office rent
,Rationale: Overhead costs support the business
generally rather than being attributable to one specific
construction project.
6. What is the purpose of a construction estimate?
A. To determine expected project cost
B. To replace the contract
C. To avoid material takeoffs
D. To eliminate overhead
Answer: To determine expected project cost
Rationale: Estimating identifies anticipated labor,
materials, equipment, subcontractor, overhead, and
other costs used to establish a proposed price.
7. What does a material takeoff provide?
A. Employee payroll records
B. A quantity list of materials required
C. Insurance claim information
D. A list of building inspectors
Answer: A quantity list of materials required
Rationale: A takeoff measures and counts materials
shown or required by the plans and specifications so
costs can be estimated.
8. If a contractor's total job cost is $80,000 and the
contractor wants a 20% markup on cost, what is the
selling price?
A. $84,000
B. $96,000
C. $100,000
D. $104,000
, Answer: $96,000
Rationale: A 20% markup on $80,000 is $16,000. Adding
$16,000 to $80,000 produces a selling price of $96,000.
9. What is gross profit?
A. Revenue minus direct costs
B. Revenue plus expenses
C. Assets minus liabilities
D. Payroll minus taxes
Answer: Revenue minus direct costs
Rationale: Gross profit is the amount remaining from
revenue after direct costs of producing the work are
deducted, before general overhead and other expenses.
10. Why should a contractor maintain accurate job-cost
records?
A. To determine actual project profitability
B. To avoid obtaining permits
C. To eliminate contracts
D. To reduce building-code requirements
Answer: To determine actual project profitability
Rationale: Job-cost records allow the contractor to
compare actual costs with estimated costs and identify
problems while the project is still underway.
11. What is retainage?
A. A contractor's advertising expense
B. Money withheld from progress payments until specified
conditions are met
C. A material delivery fee
D. A permit fee
Commercial Contractor Practice
Exam | Questions, Verified
Answers & Detailed Rationales |
Complete Contractor License
Exam Prep Study Guide |
Updated 2026
1. What is the primary purpose of a construction
contract?
A. To eliminate all project risks
B. To establish the rights and obligations of the parties
C. To guarantee a contractor's profit
D. To replace the building plans
Answer: Establish the rights and obligations of the
parties
Rationale: A construction contract defines the scope of
work, payment terms, responsibilities, time
requirements, and other obligations of the owner and
contractor.
2. Which document normally describes the materials,
workmanship, and quality requirements for a project?
A. Site survey
B. Specifications
C. Change order
D. Daily log
Answer: Specifications
,Rationale: Specifications provide detailed written
requirements concerning materials, installation
methods, workmanship, testing, and quality.
3. What is the best reason for obtaining written change
orders?
A. To increase paperwork
B. To avoid paying subcontractors
C. To document changes to the original contract
D. To eliminate inspections
Answer: To document changes to the original contract
Rationale: Written change orders establish the revised
scope, price, and schedule and help prevent disputes
over authorized changes.
4. What is direct cost?
A. Office rent
B. Advertising
C. Cost directly attributable to a specific project
D. Corporate income tax
Answer: Cost directly attributable to a specific project
Rationale: Direct costs include project-specific labor,
materials, equipment, and subcontractor costs.
5. Which is generally considered an indirect or overhead
cost?
A. Concrete used on a specific project
B. Lumber installed on a project
C. Office rent
D. Masonry labor for a project
Answer: Office rent
,Rationale: Overhead costs support the business
generally rather than being attributable to one specific
construction project.
6. What is the purpose of a construction estimate?
A. To determine expected project cost
B. To replace the contract
C. To avoid material takeoffs
D. To eliminate overhead
Answer: To determine expected project cost
Rationale: Estimating identifies anticipated labor,
materials, equipment, subcontractor, overhead, and
other costs used to establish a proposed price.
7. What does a material takeoff provide?
A. Employee payroll records
B. A quantity list of materials required
C. Insurance claim information
D. A list of building inspectors
Answer: A quantity list of materials required
Rationale: A takeoff measures and counts materials
shown or required by the plans and specifications so
costs can be estimated.
8. If a contractor's total job cost is $80,000 and the
contractor wants a 20% markup on cost, what is the
selling price?
A. $84,000
B. $96,000
C. $100,000
D. $104,000
, Answer: $96,000
Rationale: A 20% markup on $80,000 is $16,000. Adding
$16,000 to $80,000 produces a selling price of $96,000.
9. What is gross profit?
A. Revenue minus direct costs
B. Revenue plus expenses
C. Assets minus liabilities
D. Payroll minus taxes
Answer: Revenue minus direct costs
Rationale: Gross profit is the amount remaining from
revenue after direct costs of producing the work are
deducted, before general overhead and other expenses.
10. Why should a contractor maintain accurate job-cost
records?
A. To determine actual project profitability
B. To avoid obtaining permits
C. To eliminate contracts
D. To reduce building-code requirements
Answer: To determine actual project profitability
Rationale: Job-cost records allow the contractor to
compare actual costs with estimated costs and identify
problems while the project is still underway.
11. What is retainage?
A. A contractor's advertising expense
B. Money withheld from progress payments until specified
conditions are met
C. A material delivery fee
D. A permit fee
