CSLB BUSINESS AND LAW EXAM
COMPREHENSIVE LICENSING PRACTICE (2026/2027 EDITION)
150 Multiple-Choice Questions - Complete Licensing Practice
Independent-Study Disclaimer
This practice examination is an independent study aid and is not affiliated with, endorsed by, or sponsored by the
California Contractors State License Board (CSLB) or any other agency. It is provided for educational and
self-assessment purposes only and is not a substitute for official licensing materials, statutes, or professional
guidance. Law is subject to change; always consult current California Business and Professions Code, Code of
Regulations, and CSLB resources.
, Section 1: Business Organization and Licensing – Company Organization,
Licensing, Advertising (20 questions)
Q1: Which of the following is a type of business structure?
A. Only a corporation
B. Only a partnership
C. No structures
D. Sole proprietorship, partnership, corporation, and LLC [CORRECT]
Correct Answer: D
Rationale: Business structures include sole proprietorship, partnership, corporation, and LLC. The others
are incorrect.
Q2: Which of the following is TRUE about a sole proprietorship?
A. The owner has no liability
B. It is a corporation
C. The owner is personally liable for the business [CORRECT]
D. It has limited liability
Correct Answer: C
Rationale: In a sole proprietorship, the owner is personally liable for the business. The others are incorrect.
Q3: Which of the following is TRUE about a corporation?
A. Owners are personally liable
B. It provides limited liability to its owners (shareholders) [CORRECT]
C. It is a sole proprietorship
D. It has no liability protection
Correct Answer: B
Rationale: A corporation provides limited liability to its shareholders. The others are incorrect.
Q4: Which of the following is TRUE about an LLC?
A. It has no liability protection
B. It combines limited liability with pass-through taxation [CORRECT]
C. It is a sole proprietorship
D. It has double taxation always
Correct Answer: B
Rationale: An LLC provides limited liability and pass-through taxation. The others are incorrect.
Q5: Which agency licenses contractors in California?
A. The Contractors State License Board (CSLB) [CORRECT]
B. The DMV
C. The State Bar
D. The local county
Correct Answer: A
Rationale: The Contractors State License Board (CSLB) licenses contractors in California. The others are
incorrect.
CSLB Business and Law Exam - 2026/2027 Edition Page 2
, Q6: Which of the following is a licensing requirement for a California contractor?
A. Only a business license
B. Minimum age, experience, examination, bond, and insurance [CORRECT]
C. No requirements
D. Only a check
Correct Answer: B
Rationale: Licensing requires minimum age, experience, examination, bond, and insurance. The others are
incorrect.
Q7: Which of the following is TRUE about the contractor's license classification?
A. The license is classified by the type of work [CORRECT]
B. There is one class
C. Classification is optional
D. Only the name matters
Correct Answer: A
Rationale: The contractor's license is classified by the type of work. The others are incorrect.
Q8: Which of the following is TRUE about license renewal?
A. It never expires
B. Renewal is automatic
C. Only the bond is renewed
D. The license must be renewed periodically [CORRECT]
Correct Answer: D
Rationale: The license must be renewed periodically. The others are incorrect.
Q9: Which of the following is TRUE about advertising as a contractor?
A. Advertising is optional
B. The license number is not needed
C. Advertising must include the license number [CORRECT]
D. Only the name matters
Correct Answer: C
Rationale: Advertising must include the license number. The others are incorrect.
Q10: Which of the following is TRUE about subcontracting?
A. There is no responsibility
B. Only the subcontractor is responsible
C. The general contractor is responsible for the subcontractor's work [CORRECT]
D. Subcontracting is optional
Correct Answer: C
Rationale: The general contractor is responsible for the subcontractor's work. The others are incorrect.
CSLB Business and Law Exam - 2026/2027 Edition Page 3
, Q11: Which of the following is a disciplinary action for a contractor?
A. License suspension or revocation [CORRECT]
B. A reward
C. Automatic renewal
D. No consequence
Correct Answer: A
Rationale: License suspension or revocation is a disciplinary action. The others are incorrect.
Q12: Which of the following is TRUE about acting without a license?
A. It is unlawful in California [CORRECT]
B. It is allowed
C. It is optional
D. Only the bond matters
Correct Answer: A
Rationale: Acting without a license is unlawful in California. The others are incorrect.
Q13: Which of the following is TRUE about a licensed contractor's obligation?
A. Compliance is optional
B. Only the bond matters
C. The contractor must comply with the Contractors License Law [CORRECT]
D. The law does not apply
Correct Answer: C
Rationale: The contractor must comply with the Contractors License Law. The others are incorrect.
Q14: Which of the following is TRUE about license issuance?
A. No license is issued
B. Only the county issues it
C. It is automatic
D. The CSLB issues the license after requirements are met [CORRECT]
Correct Answer: D
Rationale: The CSLB issues the license after requirements are met. The others are incorrect.
Q15: Which of the following is TRUE about a 'qualifying individual'?
A. There is no qualifier
B. The qualifier is responsible for the license and business [CORRECT]
C. Only the owner qualifies
D. The qualifier is optional
Correct Answer: B
Rationale: The qualifying individual is responsible for the license and business. The others are incorrect.
CSLB Business and Law Exam - 2026/2027 Edition Page 4
COMPREHENSIVE LICENSING PRACTICE (2026/2027 EDITION)
150 Multiple-Choice Questions - Complete Licensing Practice
Independent-Study Disclaimer
This practice examination is an independent study aid and is not affiliated with, endorsed by, or sponsored by the
California Contractors State License Board (CSLB) or any other agency. It is provided for educational and
self-assessment purposes only and is not a substitute for official licensing materials, statutes, or professional
guidance. Law is subject to change; always consult current California Business and Professions Code, Code of
Regulations, and CSLB resources.
, Section 1: Business Organization and Licensing – Company Organization,
Licensing, Advertising (20 questions)
Q1: Which of the following is a type of business structure?
A. Only a corporation
B. Only a partnership
C. No structures
D. Sole proprietorship, partnership, corporation, and LLC [CORRECT]
Correct Answer: D
Rationale: Business structures include sole proprietorship, partnership, corporation, and LLC. The others
are incorrect.
Q2: Which of the following is TRUE about a sole proprietorship?
A. The owner has no liability
B. It is a corporation
C. The owner is personally liable for the business [CORRECT]
D. It has limited liability
Correct Answer: C
Rationale: In a sole proprietorship, the owner is personally liable for the business. The others are incorrect.
Q3: Which of the following is TRUE about a corporation?
A. Owners are personally liable
B. It provides limited liability to its owners (shareholders) [CORRECT]
C. It is a sole proprietorship
D. It has no liability protection
Correct Answer: B
Rationale: A corporation provides limited liability to its shareholders. The others are incorrect.
Q4: Which of the following is TRUE about an LLC?
A. It has no liability protection
B. It combines limited liability with pass-through taxation [CORRECT]
C. It is a sole proprietorship
D. It has double taxation always
Correct Answer: B
Rationale: An LLC provides limited liability and pass-through taxation. The others are incorrect.
Q5: Which agency licenses contractors in California?
A. The Contractors State License Board (CSLB) [CORRECT]
B. The DMV
C. The State Bar
D. The local county
Correct Answer: A
Rationale: The Contractors State License Board (CSLB) licenses contractors in California. The others are
incorrect.
CSLB Business and Law Exam - 2026/2027 Edition Page 2
, Q6: Which of the following is a licensing requirement for a California contractor?
A. Only a business license
B. Minimum age, experience, examination, bond, and insurance [CORRECT]
C. No requirements
D. Only a check
Correct Answer: B
Rationale: Licensing requires minimum age, experience, examination, bond, and insurance. The others are
incorrect.
Q7: Which of the following is TRUE about the contractor's license classification?
A. The license is classified by the type of work [CORRECT]
B. There is one class
C. Classification is optional
D. Only the name matters
Correct Answer: A
Rationale: The contractor's license is classified by the type of work. The others are incorrect.
Q8: Which of the following is TRUE about license renewal?
A. It never expires
B. Renewal is automatic
C. Only the bond is renewed
D. The license must be renewed periodically [CORRECT]
Correct Answer: D
Rationale: The license must be renewed periodically. The others are incorrect.
Q9: Which of the following is TRUE about advertising as a contractor?
A. Advertising is optional
B. The license number is not needed
C. Advertising must include the license number [CORRECT]
D. Only the name matters
Correct Answer: C
Rationale: Advertising must include the license number. The others are incorrect.
Q10: Which of the following is TRUE about subcontracting?
A. There is no responsibility
B. Only the subcontractor is responsible
C. The general contractor is responsible for the subcontractor's work [CORRECT]
D. Subcontracting is optional
Correct Answer: C
Rationale: The general contractor is responsible for the subcontractor's work. The others are incorrect.
CSLB Business and Law Exam - 2026/2027 Edition Page 3
, Q11: Which of the following is a disciplinary action for a contractor?
A. License suspension or revocation [CORRECT]
B. A reward
C. Automatic renewal
D. No consequence
Correct Answer: A
Rationale: License suspension or revocation is a disciplinary action. The others are incorrect.
Q12: Which of the following is TRUE about acting without a license?
A. It is unlawful in California [CORRECT]
B. It is allowed
C. It is optional
D. Only the bond matters
Correct Answer: A
Rationale: Acting without a license is unlawful in California. The others are incorrect.
Q13: Which of the following is TRUE about a licensed contractor's obligation?
A. Compliance is optional
B. Only the bond matters
C. The contractor must comply with the Contractors License Law [CORRECT]
D. The law does not apply
Correct Answer: C
Rationale: The contractor must comply with the Contractors License Law. The others are incorrect.
Q14: Which of the following is TRUE about license issuance?
A. No license is issued
B. Only the county issues it
C. It is automatic
D. The CSLB issues the license after requirements are met [CORRECT]
Correct Answer: D
Rationale: The CSLB issues the license after requirements are met. The others are incorrect.
Q15: Which of the following is TRUE about a 'qualifying individual'?
A. There is no qualifier
B. The qualifier is responsible for the license and business [CORRECT]
C. Only the owner qualifies
D. The qualifier is optional
Correct Answer: B
Rationale: The qualifying individual is responsible for the license and business. The others are incorrect.
CSLB Business and Law Exam - 2026/2027 Edition Page 4
