CSLB Practice Law B Exam Questions with 100% correct Answers

A subcontractor or material supplier has _____ days to file a lien once a notice of completion has been recorded. - ANSWER-30 How must a client submit a claim for service or repair of a defect on fit and finish items after a remodel? - ANSWER-By certified mail By overnight mail By personal delivery A contractor meets Mr. Jones at his home to discuss remodeling. The contractor and Mr. Jones sign a contract that includes a three-day cancellation form. After the contractor leaves, Mr. Jones decides not to have the work done. Instead of using the cancellation form, Mr. Jones sends the contractor a letter by first-class mail stating that he is canceling the contract. Is Mr. Jones' cancellation effective? - ANSWER-Yes. Mr. Jones' letter does cancel the contract because it indicates his intention not to be bound by the contract. If a contractor forgets to renew his or her license on time, the expired license may be renewed any time within _____ after its expiration without reapplying for a license and fulfilling the exam or waiver requirements again. - ANSWER-Five years You are the qualifier for an active contractor's license. How do you inactivate the license? - ANSWER-Write to the CSLB, requesting that the license be made inactive. When a subcontractor does work on a public works contract, the public agency considers the subcontractor to be: - ANSWER-a subcontractor of the prime contractor A contractor hires a subcontractor to demolish a concrete wall. Who is responsible for supplying safety goggles? - ANSWER-subcontractor Sometimes contracts prove to be too vague to interpret without disagreement between owner and contractor. Which of the following steps would best prevent such problems? - ANSWER-Review the plans and specifications with the owner. A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Of the following, which policy would be best for this purpose? - ANSWER-umbrella To whom do you report and pay sales tax? - ANSWER-Board of Equalization The federal Employer Identification Number (EIN) is issued by the: - ANSWER-Internal Revenue Service When purchasing insurance, what is the best way to choose among different companies? - ANSWER-cost and coverage As required by the Immigration Reform and Control Act, all employees hired on or after November 7, 1986 must complete Form _____ to verify their employment eligibility status. - ANSWER-I-9 If required safety devices are missing from tools, what should an employee do? - ANSWER-Notify the contractor, who is responsible for safety. Of the following, which document is usually delivered first in a transaction involving a home improvement contract? - ANSWER-"Notice to Owner" Who is ultimately responsible for seeing that safety equipment is actually put to use on the jobsite? - ANSWER-contractor A mechanics' lien is a written document that must be signed and verified by the claimant. The first and third steps a contractor should take in filing a lien are listed below. Step 1: Obtain the exact legal description of the property. Step 2: Step 3: Find out if the person requesting the work of improvement is the owner. What is Step 2? - ANSWER-Find out the name of the legal owner of the property as well as the percent of ownership. A(n) _____ represents a company's financial position on a specified date. - ANSWER-balance sheet When you get an approved set of plans, what should you do first? - ANSWER-Read any notes from the building department. When bidding on work, which of the following would you NOT include in the price of your bid? - ANSWER-worker's compensation insurance premium The purpose of a "Preliminary 20-day Notice" for private work is to: - ANSWER-notify the property owner that the subcontractor or firm who sent the notice will be making improvements on the property When should you let your attorney see a construction contract? - ANSWER-After the contract is prepared, but before you sign it. When is an employee allowed to view their own personnel file? - ANSWER-whenever they wish to Before beginning work, an employer or contractor must inquire whether asbestos is present in any building constructed prior to: - ANSWER-1978 Is it legal for a contractor to require employees to take lie detector tests? - ANSWER-It is not legal for the contractor to require lie detector tests, but it would be legal for a federal, state, or local public agency to require lie detector tests of their employees. When is the last day a customer can cancel a contract that was signed on Friday, December 21st? - ANSWER-the following Wednesday Which of the following provisions may not be included in a home improvement contract? - ANSWER-Owner must pay for materials before they are delivered. When can a material supplier perfect a mechanics lien? - ANSWER-After the goods have been installed in the structure. Every employer of _____ or more full- or part-time employees must keep written health and safety records for _____ years. - ANSWER-11 ... 5 The qualifying RME for a construction firm must work at least: - ANSWER-32 hr per week or 80% of the work week Where is the "Notice of Right to Cancel" found on a home improvement contract? - ANSWER-near the client signature An employer remits State disability taxes withheld from an employee's wages to what agency? - ANSWER-Employment Development Department An applicant for a contractor's license receives a notice from the Contractors' State License Board, dated October 1, that the applicant passed the written exams. To receive an active license, the applicant must file a license bond and fee no later than: - ANSWER-30-Dec A contract can be canceled when there is consent through fraud or duress by: - ANSWER-the other party. What possible reason would an owner have for requiring an unconditional lien release from a subcontractor? - ANSWER-The owner's property covered by the release may not be liened. Equity is: - ANSWER-Total Assets less Total Liabilities. Insured employers must report every work-related illness or injury to their workers' compensation carrier within _____ of the incident. - ANSWER-5 days If, during excavation, you unearth human remains or burial artifacts at a construction site, what should you do? - ANSWER-Stop work immediately at that site and any other nearby area that may have remains. A contractor has had a problem with employees stealing tools and equipment from job sites. When conducting job interviews, may the contractor ask prospective employees about their arrest records? - ANSWER-It is not legal to ask prospective employees about arrests not leading to convictions. Which act establishes the rights of workers to organize into unions and negotiate contracts? - ANSWER-National Labor Relations Act of 1935 A(n) _____ summarizes revenues, cost of sales, and operating expenses over a period of time. - ANSWER-income statement For which of the following would you not obtain a short-term loan? - ANSWER-office rent An employee works 60 hours in one week. If the hourly wage rate is $18.00 per hour, what are the gross wages? - ANSWER-$1,260 When balancing the accounts receivable, which of the following would have no effect? - ANSWER-Posting to the wrong accounts-receivable account. Which would not have to be reported to DOSH immediately or within 24 hours? - ANSWER-car accident in which an employee steps onto a public road, gets hit by a car, and suffers a concussion An employer must furnish an employee with a completed IRS Form W-2 (Wage and Tax Statement) by: - ANSWER-31-Jan What if a School District hires me for ongoing maintenance, and the individual purchase orders are each under the $1000 threshold? - ANSWER-All individual purchase orders will likely be grouped together by the state and you will be subject to the prevailing wage law. An owner should request waiver of lien rights for work on residential property after paying the full contract amount: - ANSWER-so the prime contractor, subcontractors, and other claimants will not file liens. When an owner signs a receipt for a stop notice, it usually means the owner: - ANSWER-recognizes that a lien could be placed on funds How many times may you take the contractor's license exam before your original application is voided? - ANSWER-as many times as necessary within 18 months Which of the following is considered a direct cost? - ANSWER-payroll tax What is the maximum allowed travel distance from any point of a work area to a fire extinguisher? - ANSWER-75 feet After a job is completed, the owner decides to have additional work done. How should the contractor proceed? - ANSWER-Write a new contract and ask the owner to sign it. A prime contractor entered into a construction contract with a subcontractor. An employee of the subcontractor was injured, but unfortunately the subcontractor had not secured workers' compensation coverage. Which of the following statements best describes the situation, except in cases of fraud? - ANSWER-The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. The supplier of a potentially hazardous product must be able to provide a(n) _____ with that product. - ANSWER-Safety Data Sheets If a sales presentation is made in Spanish, the home solicitation contract: - ANSWER-must be in Spanish Which of the following may not be deducted from an employee's paycheck? - ANSWER-workers' compensation insurance premiums What happens after an employee's taxable wages exceed $7,000? - ANSWER-After $7,000, the employer does not pay FUTA. A contractor usually will not be held liable for a supplier going on strike, but if your supplier did go on strike what should you do? - ANSWER-Contact the owner immediately. You are bidding on a job with plans drawn by the owner. You notice a code violation and bring it to the attention of the owner. The owner declines to remedy the code violation and tells you not to worry. What should you do? - ANSWER-Decline to bid on the work. When a notice of completion has been filed, the original contractor has _____ days to record a lien. - ANSWER-60 As part of the safety training process, contractors' supervisors are required to conduct "toolbox" or "tailgate" safety meetings. How often must these meetings be held? - ANSWER-at least once every ten working days What kind of discount do lumber yards and other suppliers offer to contractors who pay their bills promptly? - ANSWER-1%- 2% What will happen if a contractor who is awarded the bid on a public works project pays less than the prevailing wage? - ANSWER-The contractor will be required to pay back-wages to the employees. You are bidding as a prime contractor on a public works project. The work will not involve construction, improvement, or repair of streets, highways, or bridges. You will use subcontractors for part of the work. If you do not name a subcontractor for any part of the work: - ANSWER-you will do that part of the work yourself A contractor, on his own initiative, changed the design of a building and carried out the change. The owner rejected the change and stated that the building has lost market value. If the owner takes the contractor to court and obtains a favorable judgment, the owner is: - ANSWER-due the cost of repairs or the loss of market value Of the following, who is required to be registered as a home improvement salesperson? - ANSWER-Salesperson who is soliciting business by calling potential customers on the telephone. If a worker's wages are garnished and the labor contract provides less protection than the State's guidelines, what does the law require? - ANSWER-The section of the contract providing less protection is void. Is it legal for a contractor to hire professional strikebreakers to replace striking employees? - ANSWER-No. The contractor is subject to a maximum fine of $1,000 and/or a maximum jail sentence of 90 days. Your employee sets a cabinet wrong. The cabinet falls from the wall and damages the client's counter top. What should you do? - ANSWER-Claim the damage on your general liability insurance policy. All of the following are causes for disciplinary action except: - ANSWER-during bankruptcy, settling obligations incurred as a contractor for less than the full amount owed A subcontractor who does not serve a preliminary notice: - ANSWER-loses both stop notice and mechanics' lien rights What does it mean when a subcontractor signs a waiver and release form on a public works project? - ANSWER-The subcontractor gives up the right to lien the construction funds. A contractor entered into a home improvement contract for more than $500 with Mrs. Swenson to remodel her kitchen and bathroom. The contract calls for a down payment before work is to begin. According to the Business and Professions Code, how much may the contractor accept from Mrs. Swenson as down payment for the work? - ANSWER-The down payment is limited to $1000 or 10% of the total price, whichever is less. If it is discovered that the construction materials in an area contain more than 0.1% asbestos: - ANSWER-the contractor should contact DOSH immediately. Who pays FICA? - ANSWER-50% employer and 50% employee How many days does a contractor have to notify the Registrar after being issued a workers' compensation insurance policy? - ANSWER-90 days Of the following, which is best for determining the number of hours required for different phases of a project and for making sure the job is on schedule? - ANSWER-critical path method On a time-and-materials job, you should: - ANSWER-add profit and overhead to labor and materials John Meyers, a general contractor, had a contract with Mr. and Ms. Barnes to construct a gazebo and deck in their back yard. John was behind schedule and hired his 18-year-old son, Bart, to help on a part-time basis. After working on the project for a month, Bart slipped on a plank that John had laid across the deck but did not nail securely. As a result of the fall, Bart broke his leg. John is insured for workers' compensation, but Bart wants to sue his father for negligence in a civil action. Which of the following statements is CORRECT? - ANSWER-A civil action is not a possibility when the dispute involves a job-related injury, unless the employer is not insured for workers' compensation. This case would be handled by the Department of Industrial Relations. DOSH must investigate a complaint charging a serious violation of health or safety standards within: - ANSWER-three working days After you have read the plans and specifications, what is the next important step in writing a bid? - ANSWER-Walk the job. Which of the following procedures BEST ensures error-free bids? - ANSWER-rechecking the bid before submitting it to the client Your accountant advises you to set up a cost management system. What does this system do? - ANSWER-It gives a cost history to analyze labor and material costs. How often are you required to pay sales tax? - ANSWER-It depends on the expected amount of taxable sales. A notice of completion must be recorded within: - ANSWER-10 days after work is completed CSLB offers two free arbitration programs - a voluntary program for disputes involving alleged damages of between ________ and _________. - ANSWER-$15,000 and $50,000 How often are FICA taxes reported and paid? - ANSWER-quarterly Is it legal for a contractor to pay employees in cash? - ANSWER-Yes, if the contractor provides each employee with a wage deduction statement semimonthly or at the time of each wage payment. Who would be held responsible if a contractor completes a project according to plans and later discovers that there is a building code violation? - ANSWER-both the contractor and the architect Once a budget is finalized, the: - ANSWER-contractor should do the best possible job of staying within the budget Which of the following are the most effective when used together on a private works project? - ANSWER-stop payment notice and mechanics lien Who is responsible for checking the site before the building inspector arrives? - ANSWER-contractor Funds withheld to guarantee completion of a project and correction of defects are called a(n): - ANSWER-retention Some counties have an additional sales tax added to the base rate. Which of the following is a correct statement regarding this additional tax? - ANSWER-You must pay the additional tax in the county where the materials were purchased. Who pays FUTA? - ANSWER-employer Direct costs are $37,000, overhead is 12%, and profit is 5%. What is the selling price? - ANSWER-$44,578.31 Which building code should a contractor follow? - ANSWER-local code Which of the following financial ratios is the strictest measure of liquidity? - ANSWER-quick ratio By law, a "hard laborer" may not be younger than _____ years old. - ANSWER-16 If a newly hired employee does not have an SSN, what should be done? - ANSWER-The employee must apply for an SSN. If you are planning to dig, drill, and bore at a job site, you should notify _____ before starting work. - ANSWER-the regional Underground Service Alert Notification Center You have been awarded a job. It requires two days for site preparation and one day for clean-up. The contract involves two separate tasks--one lasting seven days and the other 10 days. If the two tasks can be done simultaneously, for how many days should you schedule the job? - ANSWER-13 days Which of the following statements about home- improvement laws is NOT correct? - ANSWER-The homeowner may give the salesperson a bonus. CSLB offers two free arbitration programs - a mandatory program for disputes involving alleged damages of less than _____________. - ANSWER-$15,000 A general contractor has obtained bids from several subcontractors for a private project. He notices that one bid is substantially lower than the rest. Is it ethical and a good business practice for this contractor to inform the subcontractor that the bid is substantially lower than the bids of the other subcontractors? - ANSWER-Yes. If the contractor has reason to believe that the subcontractor has made an error in preparing his bid, the contractor should notify the subcontractor of the apparent error, but the contractor may not disclose the amounts of the other bids. Who must sign a joint control addendum to a home improvement contract? - ANSWER-owner, contractor, and joint control officer When should a contractor renew the contractor's license bond? - ANSWER-30 days before it expires How long does a client have to cancel a contract for repairs that are the result of an event for which a State of Emergency was declared? - ANSWER-7 business days What is the most likely reason to lose a bid? - ANSWER-vague specifications A contractor and a homeowner sign a home solicitation contract. If the owner lawfully cancels the contract, how long does the contractor have to pick up unused materials that were delivered to the owner's property? - ANSWER-within 20 days after cancellation Why would a contractor have a case in a Superior Court? - ANSWER-if it is a dispute of more than $25,000 Business records must be kept and made available for inspection by the Registrar of Contractors for a period of _____ after completion of a construction project or operation. - ANSWER-five years Ms. Gomez applies for a job. Of the following, the only reason an employer may lawfully deny her employment is: - ANSWER-she has no work experience or Social Security number Construction or alteration of any building, highway, excavation, or other structure in the State of California requires a contractor's license if the total cost of one or more contracts on the project is: - ANSWER-$500 or more in labor and materials What sort of notes are you looking for when you get a set of as-built plans? - ANSWER-changes On a large job, which of the following would be the best scheduling method? - ANSWER-critical path method (CPM) When calculating unemployment and disability insurance taxes, an employer would not include: - ANSWER-severance pay Who must pay for a pre-employment physical? - ANSWER-employer What is the best way to monitor labor costs? - ANSWER-Figure the hours from detailed time cards. Excavators must clearly mark the boundaries of a work area, usually with _____ paint. - ANSWER-white If no notice of completion or cessation is given on a job, how many days does a contractor have to file a mechanics' lien after completion of work? - ANSWER-90 days Before you build on landfill you must notify: - ANSWER-government/engineers Using money from a current job to pay for unrelated projects is called: - ANSWER-diversion A consumer may cancel a home solicitation contract at any time prior to midnight of the _____ after the date of the transaction. - ANSWER-3rd business day The "Notice to Owner" is given to: - ANSWER-let the owner know the property can be liened For which of the following projects would you need a building permit? - ANSWER-When a permit is required by the local building department. What is the penalty for obtaining and providing to another any part of the exams administered by the Contractors' State License Board? - ANSWER-$500 fine misdemeanor conviction the exam will be forfeited, and the applicant may not reapply for one year Which of the following is considered a fixed expense? - ANSWER-office rent Which of the following must employees have in order to pass a job performance evaluation? - ANSWER-They must have a detailed job description. Where is truck insurance listed on an income statement? - ANSWER-operating expenses An active contractor's license is issued on January 18, 1995. On what date will the license expire? - ANSWER-31-Jan-97 How often should a job supervisor or responsible managing employee visit the job site? - ANSWER-once a day A licensed general contractor enters into a contract with an unlicensed subcontractor. Who is in violation of the law if the work performed requires a contractor's license? - ANSWER-both the general contractor and the subcontractor AB 2040 requires that before work begins on a project, the contractor must inquire of the owner whether asbestos is present in any building constructed prior to: - ANSWER-1978 Social security tax for a self-employed contractor is: - ANSWER-based on the rate set for the self-employed for the year in which the tax is paid You are bidding on a job with plans drawn by a homeowner. You notice that the dimensions on the plans do not add up. What should you do? - ANSWER-Inform the homeowner that you cannot bid until the numbers add up. A licensed contractor contracts with a building owner to do a $900 improvement. When applying for a building permit, the contractor checks the owner-builder box on the declaration form. Which of the following statements is correct? - ANSWER-The contractor may not check the owner-builder box because the owner contracted for the improvement. In most construction contracts, the reten