CA CONTRACTORS LICENSE TEST QUESTIONS
BUSINESS AND LAW 2025-2026 QUESTIONS WITH
100% CORRECT ANSWERS
How much time does a contractor have to renew his license after the expiration date without retaking th
e exam? CORRECT ANSWER 5 year
When you collect sales tax from your customer for goods, which agency do you reportPand pay sales tax
collected? CORRECT ANSWER State board of equalization
Sales tax is a state tax. State income taxes are payable to the franchise tax board. IRS only collects federa
l taxes
How longPis the contractor liable for patent or visible defects? CORRECT ANSWER 4 years
How longPis the contractorr liable for latent or structural defects CORRECT
ANSWER Latent is an invisible or structural defect liable for up to 10Pyears
Accounts receivable contains CORRECT ANSWER Retention
Retention usually 10%; it is withheld by the owner from the contract to ensure that the job is done prop
erly and subcontractors are paid.
What is considered a fixed costPto a contractor? CORRECT ANSWER Office rent
What is considered a variable cost to contractors? CORRECT ANSWER Construction material
If a home solicitation presentation is made in spanish, the contract language mustPbe CORRECT ANSWER
spanish
If the employer requires a pre-employement physical exam, who must pay for the exam?
CORRECT ANSWER Employer
, How often should a contractor renew his license? CORRECT ANSWER 2 years
Licenses become void after 5
What is the overtime pay rate after 8hrs of work CORRECT ANSWER 1.5.
after 12, rate doubles
What should be included in the change order form CORRECT ANSWER Reason for change
What is the benefit of arbitration over legislation CORRECT ANSWER Arbitration is cheaper
When the total price of the bid is over ____ the contractor must be licensed CORRECT ANSWER $500
Where does a contractor/employer obtain a Federal Employer Identifacation Number CORRECT
ANSWER IRS
In small claims court -Pcorrect answer-You cannot be presented by an attorney.
If the claim is appealed, you can have an attorney
Who publishes the material safety data sheet? CORRECT ANSWER Manufacturer
The notice of cessation is filed CORRECT ANSWER after labor has ceased for 30 days
What is the max value of a gift which the home improvement sales person can give to a potential custo
mer? CORRECT ANSWER $5
Which employees are not covered by DOSH or Cal/Osha? CORRECT ANSWER Federal employees.
DOSH isPa state agency that can only cover state employees, county employees and private employees.
Federal employees are covered by OSHA
BUSINESS AND LAW 2025-2026 QUESTIONS WITH
100% CORRECT ANSWERS
How much time does a contractor have to renew his license after the expiration date without retaking th
e exam? CORRECT ANSWER 5 year
When you collect sales tax from your customer for goods, which agency do you reportPand pay sales tax
collected? CORRECT ANSWER State board of equalization
Sales tax is a state tax. State income taxes are payable to the franchise tax board. IRS only collects federa
l taxes
How longPis the contractor liable for patent or visible defects? CORRECT ANSWER 4 years
How longPis the contractorr liable for latent or structural defects CORRECT
ANSWER Latent is an invisible or structural defect liable for up to 10Pyears
Accounts receivable contains CORRECT ANSWER Retention
Retention usually 10%; it is withheld by the owner from the contract to ensure that the job is done prop
erly and subcontractors are paid.
What is considered a fixed costPto a contractor? CORRECT ANSWER Office rent
What is considered a variable cost to contractors? CORRECT ANSWER Construction material
If a home solicitation presentation is made in spanish, the contract language mustPbe CORRECT ANSWER
spanish
If the employer requires a pre-employement physical exam, who must pay for the exam?
CORRECT ANSWER Employer
, How often should a contractor renew his license? CORRECT ANSWER 2 years
Licenses become void after 5
What is the overtime pay rate after 8hrs of work CORRECT ANSWER 1.5.
after 12, rate doubles
What should be included in the change order form CORRECT ANSWER Reason for change
What is the benefit of arbitration over legislation CORRECT ANSWER Arbitration is cheaper
When the total price of the bid is over ____ the contractor must be licensed CORRECT ANSWER $500
Where does a contractor/employer obtain a Federal Employer Identifacation Number CORRECT
ANSWER IRS
In small claims court -Pcorrect answer-You cannot be presented by an attorney.
If the claim is appealed, you can have an attorney
Who publishes the material safety data sheet? CORRECT ANSWER Manufacturer
The notice of cessation is filed CORRECT ANSWER after labor has ceased for 30 days
What is the max value of a gift which the home improvement sales person can give to a potential custo
mer? CORRECT ANSWER $5
Which employees are not covered by DOSH or Cal/Osha? CORRECT ANSWER Federal employees.
DOSH isPa state agency that can only cover state employees, county employees and private employees.
Federal employees are covered by OSHA
