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CSLB CONTRACTOR'S LAW & BUSINESS EXAM
2025 | CERTIFIED Q&A
What does it mean when a subcontractor signs a waiver and release form on a
public works project? - correct-answer-The subcontractor gives up the right to lien
the construction funds.
A contractor is looking for an insurance policy to cover a high degree of exposure
to risk. Of the following, which policy would be the best for this purpose?
A. Property
B. General Liability
C. Builder's Risk
D. Umbrella - correct-answer-Umbrella policy. But the umbrella policy would only
cover the high degree of exposure if it was covered by one of the underlying
policies.
Which of the following is considered a direct cost?
A. Telephone use by employees
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B. Personal Vehicle
C. Insurance.
D. Payroll Tax - correct-answer-Payroll tax is considered a direct cost.
How many days does a contractor have to notify the Registrar after being issued a
workers' compensation insurance policy? - correct-answer-A contractor has 90
days to notify the Registrar after being issued a workers' compensation insurance
policy.
When balancing the accounts receivable which of the following would have no
effect?
A. Posting to the wrong accounts-receivable account.
B. Crediting instead of debiting the accounts-receivable account.
C. Debiting instead of crediting the accounts-receivable account.
D. Posting a receivable to an accounts-payable account. - correct-answer-Posting
to the wrong accounts-receivable account.
What kind of discount do lumber yards and other supplies offer to contractors
who pay their bill promptly? - correct-answer-1%-2% discount.
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Of the following, which document is usually delivered first in a transaction
involving a home improvement contract?
A. Three-day notice of right to cancel
B. The contract
C. "Notice to Owner"
D. 20-Day preliminary notice - correct-answer-The "Notice to Owner"
At the time this question was written, the "Notice to Owner" was required to be
given to the client "prior to entering into a contract with an owner for work
specified as home improvement or swimming pool construction." Since then,
several of the consumer protection laws covering Home Improvement Contracts
have been revised to make them easier for the average homeowner to
understand. The "Mechanics Lien Warning" has replaced the "Notice to Owner"
and is included as part of the contract rather than given to the client in advance.
Despite the changes in the laws, the CSLB still refers to "Notice to Owner" in
several current publications as well as on their website. Without any evidence to
the contrary, we must assume that the question may still be an active question in
the database.
If this question still appears as written here, then the correct answer is "Notice to
Owner."
A three-day notice of right to cancel is also included as part of the contract, but is
not required if the contract is negotiated at the contractor's place of business.
, 4|Page
A 20-day Preliminary Notice is typically delivered by the subcontractor when he or
she starts work, but can be delivered later.
Ms. Gomez applies for a job. Of the following, the only reason an employer may
lawfully deny her employment is:
A. She is over 50 years of age
B. She is Hispanic and everyone else is African-American or Caucasian
C. Lifting is involved and she is a woman.
D. She has no work experience or Social Security Number. - correct-answer-No
related work experience or social security number.
What is the most likely reason to lose a bid?
A. 10% added to profit.
B. Vague specifications
C. Prices from subs were not exact.
D. Costs of materials were not obtained. - correct-answer-Vague specifications.
Which of the following procedures BEST ensures error-free bids?
A. Working with an attorney
CSLB CONTRACTOR'S LAW & BUSINESS EXAM
2025 | CERTIFIED Q&A
What does it mean when a subcontractor signs a waiver and release form on a
public works project? - correct-answer-The subcontractor gives up the right to lien
the construction funds.
A contractor is looking for an insurance policy to cover a high degree of exposure
to risk. Of the following, which policy would be the best for this purpose?
A. Property
B. General Liability
C. Builder's Risk
D. Umbrella - correct-answer-Umbrella policy. But the umbrella policy would only
cover the high degree of exposure if it was covered by one of the underlying
policies.
Which of the following is considered a direct cost?
A. Telephone use by employees
,2|Page
B. Personal Vehicle
C. Insurance.
D. Payroll Tax - correct-answer-Payroll tax is considered a direct cost.
How many days does a contractor have to notify the Registrar after being issued a
workers' compensation insurance policy? - correct-answer-A contractor has 90
days to notify the Registrar after being issued a workers' compensation insurance
policy.
When balancing the accounts receivable which of the following would have no
effect?
A. Posting to the wrong accounts-receivable account.
B. Crediting instead of debiting the accounts-receivable account.
C. Debiting instead of crediting the accounts-receivable account.
D. Posting a receivable to an accounts-payable account. - correct-answer-Posting
to the wrong accounts-receivable account.
What kind of discount do lumber yards and other supplies offer to contractors
who pay their bill promptly? - correct-answer-1%-2% discount.
,3|Page
Of the following, which document is usually delivered first in a transaction
involving a home improvement contract?
A. Three-day notice of right to cancel
B. The contract
C. "Notice to Owner"
D. 20-Day preliminary notice - correct-answer-The "Notice to Owner"
At the time this question was written, the "Notice to Owner" was required to be
given to the client "prior to entering into a contract with an owner for work
specified as home improvement or swimming pool construction." Since then,
several of the consumer protection laws covering Home Improvement Contracts
have been revised to make them easier for the average homeowner to
understand. The "Mechanics Lien Warning" has replaced the "Notice to Owner"
and is included as part of the contract rather than given to the client in advance.
Despite the changes in the laws, the CSLB still refers to "Notice to Owner" in
several current publications as well as on their website. Without any evidence to
the contrary, we must assume that the question may still be an active question in
the database.
If this question still appears as written here, then the correct answer is "Notice to
Owner."
A three-day notice of right to cancel is also included as part of the contract, but is
not required if the contract is negotiated at the contractor's place of business.
, 4|Page
A 20-day Preliminary Notice is typically delivered by the subcontractor when he or
she starts work, but can be delivered later.
Ms. Gomez applies for a job. Of the following, the only reason an employer may
lawfully deny her employment is:
A. She is over 50 years of age
B. She is Hispanic and everyone else is African-American or Caucasian
C. Lifting is involved and she is a woman.
D. She has no work experience or Social Security Number. - correct-answer-No
related work experience or social security number.
What is the most likely reason to lose a bid?
A. 10% added to profit.
B. Vague specifications
C. Prices from subs were not exact.
D. Costs of materials were not obtained. - correct-answer-Vague specifications.
Which of the following procedures BEST ensures error-free bids?
A. Working with an attorney
