CONTRACTORS LICENSE IN ARIZONA EXAM QUESTIONS AND
ANSWERS (VERIFIED ANSWERS GRADED A+) LATEST UPDATE
2025/2026
Number of Employees Required for Workers' Compensation - CORRECT
ANSWER More than 1 employee
Penalty for Failing to Identify Underground Utilities - CORRECT ANSWER Fine
up to $5000 for first violation, up to $70000 for subsequent violations
Regulation of Air Pollutants - CORRECT ANSWER Clean Air Act
Applicability of Fair Labor Act - CORRECT ANSWER Applies to employers
with 1 or more employees
Purpose of Form I-9 - CORRECT ANSWER Verify employees' legal immigration
status in the USA
Definition of Project Overhead - CORRECT ANSWER Includes items like
bonds, temporary storage, dumpsters, security guards, porter potties; makes up 5-
10% of bid
Overview of Clean Water Act - CORRECT ANSWER Regulates discharges of
pollutants into US waters
Explanation of Current Liabilities - CORRECT ANSWER Liabilities maturing
and payable within 1 year
Retention Period for Immigration Forms - CORRECT ANSWER At least 3 years
,Purpose of Maintenance Bond - CORRECT ANSWER Guarantees no defective
workmanship or material for one year on completed project
Liability Insurance - CORRECT ANSWER To protect against third party claims
Keyman Life Insurance - CORRECT ANSWER To ensure business continuity in
case of death or incapacity
Employee Deductions for Workers' Comp - CORRECT ANSWER Employees do
not pay, employer covers all costs
Form I-9 Completion Timeframe - CORRECT ANSWER Should be completed
within 3 days of hire
Retention Period for Lead Pamphlet Receipt - CORRECT ANSWER Must be
kept for 3 years
Ownership of Bonds or Cash Deposits - CORRECT ANSWER Under the
licensee's name
Publication Timing Requirement - CORRECT ANSWER Publish within 60 days
for 3 consecutive publications
Certification of Project Completion - CORRECT ANSWER Done by the architect
or engineer
,Progress Payments Definition - CORRECT ANSWER Partial payments after
completion of construction phases
Single Prime Method Explanation - CORRECT ANSWER Owner hires architect
for design, contractor for work
What is a Payment Bond - CORRECT ANSWER Guarantees subcontractors and
suppliers will be paid if they perform properly under the contract
How Long to Keep Tax Records - CORRECT ANSWER At least 4 years
What is All Risk Builders Insurance - CORRECT ANSWER Covers property
owners and builders for buildings under construction, including machinery,
equipment, materials, supplies, and fixtures
What is Property Insurance - CORRECT ANSWER Typically covers business
and personal property when damaged, stolen, or lost
What is Workers' Compensation - CORRECT ANSWER Protects employees
when they are injured at work
What is Design and Build - CORRECT ANSWER Owner contracts one company
to complete the process from start to finish
What is Company Overhead - CORRECT ANSWER Cost of doing business,
includes expenses like office rent, taxes, phone, and accounting fees
Exemption from OSHA Recordkeeping - CORRECT ANSWER Employers with
10 or fewer employees
, Consequence of Failing to Perform in Contract - CORRECT ANSWER Results in
a breach of contract
The Registrar may impose civil penalties of not to exceed how much per violation
- CORRECT ANSWER Not to exceed over $500
Every person making an application for a license shall pay an assessment of not
more than how much - CORRECT ANSWER $600
Any person who is or was at the time of omission named on the license is not
eligible to receive a new license until when - CORRECT ANSWER Until the
fund is paid in full
If any amount is paid from the fund settlement of a claim arising the license will
automatically be suspended by operation of law until when - CORRECT
ANSWER Until the amount paid from the fund is repaid in full plus interest of
10% a year
The liability of the fund shall not exceed how much money - CORRECT
ANSWER $200,000
What is the equation for the balance sheet - CORRECT ANSWER Assets =
Liabilities + Owners Equity
Performance bond - CORRECT ANSWER Guarantees that the contractor will
complete a contract within its time frame and conditions
ANSWERS (VERIFIED ANSWERS GRADED A+) LATEST UPDATE
2025/2026
Number of Employees Required for Workers' Compensation - CORRECT
ANSWER More than 1 employee
Penalty for Failing to Identify Underground Utilities - CORRECT ANSWER Fine
up to $5000 for first violation, up to $70000 for subsequent violations
Regulation of Air Pollutants - CORRECT ANSWER Clean Air Act
Applicability of Fair Labor Act - CORRECT ANSWER Applies to employers
with 1 or more employees
Purpose of Form I-9 - CORRECT ANSWER Verify employees' legal immigration
status in the USA
Definition of Project Overhead - CORRECT ANSWER Includes items like
bonds, temporary storage, dumpsters, security guards, porter potties; makes up 5-
10% of bid
Overview of Clean Water Act - CORRECT ANSWER Regulates discharges of
pollutants into US waters
Explanation of Current Liabilities - CORRECT ANSWER Liabilities maturing
and payable within 1 year
Retention Period for Immigration Forms - CORRECT ANSWER At least 3 years
,Purpose of Maintenance Bond - CORRECT ANSWER Guarantees no defective
workmanship or material for one year on completed project
Liability Insurance - CORRECT ANSWER To protect against third party claims
Keyman Life Insurance - CORRECT ANSWER To ensure business continuity in
case of death or incapacity
Employee Deductions for Workers' Comp - CORRECT ANSWER Employees do
not pay, employer covers all costs
Form I-9 Completion Timeframe - CORRECT ANSWER Should be completed
within 3 days of hire
Retention Period for Lead Pamphlet Receipt - CORRECT ANSWER Must be
kept for 3 years
Ownership of Bonds or Cash Deposits - CORRECT ANSWER Under the
licensee's name
Publication Timing Requirement - CORRECT ANSWER Publish within 60 days
for 3 consecutive publications
Certification of Project Completion - CORRECT ANSWER Done by the architect
or engineer
,Progress Payments Definition - CORRECT ANSWER Partial payments after
completion of construction phases
Single Prime Method Explanation - CORRECT ANSWER Owner hires architect
for design, contractor for work
What is a Payment Bond - CORRECT ANSWER Guarantees subcontractors and
suppliers will be paid if they perform properly under the contract
How Long to Keep Tax Records - CORRECT ANSWER At least 4 years
What is All Risk Builders Insurance - CORRECT ANSWER Covers property
owners and builders for buildings under construction, including machinery,
equipment, materials, supplies, and fixtures
What is Property Insurance - CORRECT ANSWER Typically covers business
and personal property when damaged, stolen, or lost
What is Workers' Compensation - CORRECT ANSWER Protects employees
when they are injured at work
What is Design and Build - CORRECT ANSWER Owner contracts one company
to complete the process from start to finish
What is Company Overhead - CORRECT ANSWER Cost of doing business,
includes expenses like office rent, taxes, phone, and accounting fees
Exemption from OSHA Recordkeeping - CORRECT ANSWER Employers with
10 or fewer employees
, Consequence of Failing to Perform in Contract - CORRECT ANSWER Results in
a breach of contract
The Registrar may impose civil penalties of not to exceed how much per violation
- CORRECT ANSWER Not to exceed over $500
Every person making an application for a license shall pay an assessment of not
more than how much - CORRECT ANSWER $600
Any person who is or was at the time of omission named on the license is not
eligible to receive a new license until when - CORRECT ANSWER Until the
fund is paid in full
If any amount is paid from the fund settlement of a claim arising the license will
automatically be suspended by operation of law until when - CORRECT
ANSWER Until the amount paid from the fund is repaid in full plus interest of
10% a year
The liability of the fund shall not exceed how much money - CORRECT
ANSWER $200,000
What is the equation for the balance sheet - CORRECT ANSWER Assets =
Liabilities + Owners Equity
Performance bond - CORRECT ANSWER Guarantees that the contractor will
complete a contract within its time frame and conditions
