8/13/25, 4:25 AM California State Contractors License Law and Business Test Study Guide
California State Contractors License Law and Business
Test Study Guide EXAM 2025-2026 \LATEST
VERSION
How many hours is an RME, 80% or 32 hours
Responsible Managing
Employee required to work.
How many licenses can an 3
Owner or Qualifying Partner
qualify for at a time.
How may licenses can an 1
RME or RMO qualify for at
a time?
Can you lend your license to No. That would be punishable by law.
someone?
Can you abandon a project No. This would be cause for disciplinary action. It is classified as
without a legal excuse? "Breach of Contract".
A contractor is not Incidental and supplemental to the primary job.
prohibited from taking and Otherwise it must be performed by a sub.
executing a contract
involving the use of two or
more crafts or trades, if
the performance of the
work is ___________ and
supplemental to the primary
job.
Can you use funds from one No. This falls under the category of Larceny and is a
project to finish another? misdemeanor or felony.
Is it a crime to use false Yes. It is a misdemeanor.
or misleading
… 1/18
,8/13/25, 4:25 AM California State Contractors License Law and Business Test Study Guide
advertising?
Two or more qualifiers of different licenses who seek to
What is a joint venture license?
combine their licenses and expertise for a specific
project.
How long is a joint venture 2 years after first given.
valid for?
If a QP leaves, what can the A continuance of up to 1 year in order to complete the project.
remaining party file to get
more time?
If a QP leaves, the remaining 90 days
party has __ days to report
it to the state.
What must qualifiers do visit the site daily.
every day regarding to the
job site?
When must the 7 days after each progress payment by the owner to the direct
subcontractors be paid? contractor.
____ is the task of preparing a Bidding
detailed cost estimate for the
job, including material.
labor, overhead, as well
as the profit or mark-up.
Materials, labor, permits, Direct Costs
loan fees, subs, are all
considered what type of
costs?
Office space rent, office Overhead costs
supplies,
advertising, staff, insurance,
and utility bills are
considered what type of
costs?
Equipment maintenance, truck Indirect Costs
maintenance, lubrication, tools,
fuel,
equipment are considered
what type of costs?
… 2/18
, 8/13/25, 4:25 AM California State Contractors License Law and Business Test Study Guide
Written offers from Construction bid
contractors to
undertake a construction job
in return for a sum of money
which can be negotiated,
limited or selective
competition, or an open
competition.
The 3 essential estimates Gross Income, Overhead expenses, Net profit desired.
needed to determine your
"mark up"
The industry average for Net 6%
profit percentage is...
What is the formula for OE + NP = A1...GI - A1= JC...GI / JC = Mark up
determining "mark up".
Where is the best place to Recent job history.
look for bidding advice?
Do sales tax costs need to Yes
be included in the bid
estimate?
If the subs bid is too low, Yes, it is ethical and good practice to call the sub and
should you let him know? inform him when the bid is too high or low.
Should you build against No. It is illegal to build against code.
code if the customer
insists?
Should you bid against other Always bid against the job. Doing otherwise will cause
companies or against the you troubles in paying subs, materials, and equipment
job? needed.
Should you take your time Take your time and be critical, ensure you understand
and double check everything all aspects of the plan, walk the job and double check
before leaving a quote or just the bid estimate.
get it done quickly?
An agreement with specific Contract
terms between two or more
people for performance and
compensation.
… 3/18
California State Contractors License Law and Business
Test Study Guide EXAM 2025-2026 \LATEST
VERSION
How many hours is an RME, 80% or 32 hours
Responsible Managing
Employee required to work.
How many licenses can an 3
Owner or Qualifying Partner
qualify for at a time.
How may licenses can an 1
RME or RMO qualify for at
a time?
Can you lend your license to No. That would be punishable by law.
someone?
Can you abandon a project No. This would be cause for disciplinary action. It is classified as
without a legal excuse? "Breach of Contract".
A contractor is not Incidental and supplemental to the primary job.
prohibited from taking and Otherwise it must be performed by a sub.
executing a contract
involving the use of two or
more crafts or trades, if
the performance of the
work is ___________ and
supplemental to the primary
job.
Can you use funds from one No. This falls under the category of Larceny and is a
project to finish another? misdemeanor or felony.
Is it a crime to use false Yes. It is a misdemeanor.
or misleading
… 1/18
,8/13/25, 4:25 AM California State Contractors License Law and Business Test Study Guide
advertising?
Two or more qualifiers of different licenses who seek to
What is a joint venture license?
combine their licenses and expertise for a specific
project.
How long is a joint venture 2 years after first given.
valid for?
If a QP leaves, what can the A continuance of up to 1 year in order to complete the project.
remaining party file to get
more time?
If a QP leaves, the remaining 90 days
party has __ days to report
it to the state.
What must qualifiers do visit the site daily.
every day regarding to the
job site?
When must the 7 days after each progress payment by the owner to the direct
subcontractors be paid? contractor.
____ is the task of preparing a Bidding
detailed cost estimate for the
job, including material.
labor, overhead, as well
as the profit or mark-up.
Materials, labor, permits, Direct Costs
loan fees, subs, are all
considered what type of
costs?
Office space rent, office Overhead costs
supplies,
advertising, staff, insurance,
and utility bills are
considered what type of
costs?
Equipment maintenance, truck Indirect Costs
maintenance, lubrication, tools,
fuel,
equipment are considered
what type of costs?
… 2/18
, 8/13/25, 4:25 AM California State Contractors License Law and Business Test Study Guide
Written offers from Construction bid
contractors to
undertake a construction job
in return for a sum of money
which can be negotiated,
limited or selective
competition, or an open
competition.
The 3 essential estimates Gross Income, Overhead expenses, Net profit desired.
needed to determine your
"mark up"
The industry average for Net 6%
profit percentage is...
What is the formula for OE + NP = A1...GI - A1= JC...GI / JC = Mark up
determining "mark up".
Where is the best place to Recent job history.
look for bidding advice?
Do sales tax costs need to Yes
be included in the bid
estimate?
If the subs bid is too low, Yes, it is ethical and good practice to call the sub and
should you let him know? inform him when the bid is too high or low.
Should you build against No. It is illegal to build against code.
code if the customer
insists?
Should you bid against other Always bid against the job. Doing otherwise will cause
companies or against the you troubles in paying subs, materials, and equipment
job? needed.
Should you take your time Take your time and be critical, ensure you understand
and double check everything all aspects of the plan, walk the job and double check
before leaving a quote or just the bid estimate.
get it done quickly?
An agreement with specific Contract
terms between two or more
people for performance and
compensation.
… 3/18
