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