CSLB CONTRACTOR'S LAW BUSINESS EXAM QUESTIONS
WITH ANSWERS A+ 2025
✔✔DOSH must investigate a complaint charging a serious violation of health or safety
standards within: - ✔✔DOSH must investigate a complaint charging a serious violation
of health or safety standards within two working days.
✔✔By law, a "hard laborer" may not be younger than ______ years old. - ✔✔A hard
laborer may not be younger than 16 years old.
✔✔When is the last day a customer can cancel a contract that was signed on Friday,
December 21st? - ✔✔The following Wednesday.
The customer has the right to cancel 3 business days after the day the contract has
been signed and delivered to the. In this case: Saturday Midnight day one. Monday
midnight day two Wednesday Midnight day three. NOTE: Sunday and Tuesday were
not business days since Tuesday was a holiday. Correct answer is Wednesday
midnight.
✔✔When a notice of completion has been filed, the original contractor has how many
days to record a lien. - ✔✔60 days to record a lien.
✔✔Which of the following financial ratios is the strictest measure of liquidity?
A. Quick Ratio
B. Current Ratio
C. Profitability Ratio
D. Leverage Ratio - ✔✔The quick ratio is the strictest measure of liquidity.
✔✔When should you let your attorney see a construction contract? - ✔✔After the
contract is prepared but before it is signed.
✔✔How often are FICA taxes reported and paid? - ✔✔Quarterly
✔✔Business records must be kept and made available for inspection by the Registrar of
Contractors for a period of _____ after completion of a construction project or operation.
A. One year
B. Two years
C. Three years
D. Five years - ✔✔Business records must be kept for 5 years.
✔✔Funds withheld to guarantee completion of a project and correction of defects are
called a(n): - ✔✔Retention
,✔✔Direct costs are $37,000, overhead is 12% and profit is 5%. What is the selling
price? - ✔✔$44,578.31
Add the 12% overhead and 5% profit together, then subtract that from 100% (83%).
Then divide the total direct cost ($37,000) by the remaining percentage (83%) =
445.7831.
✔✔A mechanics' lien is a written document that must be signed and verified by the
claimant. The first and third steps a contractor should take in filing a lien are listed
below. Step 1: Obtain the exact legal description of the property. Step 2: Step 3: Find
out if the person requesting the work of improvement is the owner. What is Step 2? -
✔✔Find out the name of the legal owner of the property as well as the percent of
ownership.
A mechanics' lien.
Step 1: Obtain the exact legal description of the property. Step 2: Find out the name of
the legal owner of the property as well as the percent of ownership.
Step 3: Find out if the person requesting the work of improvement is the owner.
✔✔What happens after an employee's taxable wages exceed $7,000? - ✔✔After
$7,000, the employer does not pay FUTA.
✔✔A subcontractor who does not serve a preliminary notice:
A. May not serve a stop notice but may file a mechanics' lien.
B. May not file a mechanics' lien but may serve a stop notice
C. loses both stop and mechanics's lien rights
D. Loses nothing because subcontractors are not required to serve preliminary notices.
- ✔✔A subcontractor that does not serve a preliminary notice loses both stop notice and
mechanics' lien rights.
✔✔If a sales presentation is made in Spanish, the home solicitation contract: - ✔✔Must
be in Spanish.
✔✔Who pays FUTA? - ✔✔The employer pays FUTA until an employees taxable wages
exceed $7,000.
✔✔If a contractor forgets to renew his or her license on time, the expired license may
be renewed any time within _____ after its expiration without reapplying for a license
and fulfilling the exam or waiver requirements again. - ✔✔Five years.
✔✔How often are you required to pay sales tax? - ✔✔It depends on the expected
amount of taxable sales.
, ✔✔A contractor hires a subcontractor to demolish a concrete wall. Who is responsible
for supplying safety goggles. - ✔✔Subcontractor
✔✔How long does a client have to cancel a contract for repairs that are the result of an
event for which a State of Emergency was declared? - ✔✔In a state of emergency, a
client has 7 business days to cancel a contract for repairs.
✔✔All of the following are causes for disciplinary action except:
A. Allowing your license to be used by an unlined contractor.
B. Entering into a contract with another contractor who is not licensed.
C. During bankruptcy, setting obligations incurred as a contractor for less than the full
amount owed.
D. Willful or deliberate failure to pay money when due for materials or services. -
✔✔During bankruptcy, settling obligations incurred as a contractor for less than the full
amount owed.
✔✔What is the maximum allowed travel distance from any point of a work area to a fire
extinguisher "Class "A"? - ✔✔75 Feet
✔✔The CSLB has established a mandatory arbitration program of verified companies in
which the damage is: - ✔✔$12,500 or less.
✔✔A contractor usually will not be held liable for a supplier going on strike, but if your
supplier did go on strike what would you do? - ✔✔Contact the owner immediately.
✔✔When you get an approved set of plans, what should you do first? - ✔✔Read any
notes from the building department.
✔✔A(n) _____ represents a company's financial position on a specified date.
A. Balance Sheet
B. Income statement
C. Cash flow statement
D. Profit plan - ✔✔A balance sheet.
✔✔You are the qualifier for an active contractor's license. How do you inactivate the
license? - ✔✔Write to CSLB, requesting that the license be made inactive.
✔✔You are bidding as a prime contractor on a public works project. The work will not
involve construction, improvement, or repair of streets, highways, or bridges. You will
use subcontractors for part of the work. If you do not name a subcontractor for any part
of the work:
WITH ANSWERS A+ 2025
✔✔DOSH must investigate a complaint charging a serious violation of health or safety
standards within: - ✔✔DOSH must investigate a complaint charging a serious violation
of health or safety standards within two working days.
✔✔By law, a "hard laborer" may not be younger than ______ years old. - ✔✔A hard
laborer may not be younger than 16 years old.
✔✔When is the last day a customer can cancel a contract that was signed on Friday,
December 21st? - ✔✔The following Wednesday.
The customer has the right to cancel 3 business days after the day the contract has
been signed and delivered to the. In this case: Saturday Midnight day one. Monday
midnight day two Wednesday Midnight day three. NOTE: Sunday and Tuesday were
not business days since Tuesday was a holiday. Correct answer is Wednesday
midnight.
✔✔When a notice of completion has been filed, the original contractor has how many
days to record a lien. - ✔✔60 days to record a lien.
✔✔Which of the following financial ratios is the strictest measure of liquidity?
A. Quick Ratio
B. Current Ratio
C. Profitability Ratio
D. Leverage Ratio - ✔✔The quick ratio is the strictest measure of liquidity.
✔✔When should you let your attorney see a construction contract? - ✔✔After the
contract is prepared but before it is signed.
✔✔How often are FICA taxes reported and paid? - ✔✔Quarterly
✔✔Business records must be kept and made available for inspection by the Registrar of
Contractors for a period of _____ after completion of a construction project or operation.
A. One year
B. Two years
C. Three years
D. Five years - ✔✔Business records must be kept for 5 years.
✔✔Funds withheld to guarantee completion of a project and correction of defects are
called a(n): - ✔✔Retention
,✔✔Direct costs are $37,000, overhead is 12% and profit is 5%. What is the selling
price? - ✔✔$44,578.31
Add the 12% overhead and 5% profit together, then subtract that from 100% (83%).
Then divide the total direct cost ($37,000) by the remaining percentage (83%) =
445.7831.
✔✔A mechanics' lien is a written document that must be signed and verified by the
claimant. The first and third steps a contractor should take in filing a lien are listed
below. Step 1: Obtain the exact legal description of the property. Step 2: Step 3: Find
out if the person requesting the work of improvement is the owner. What is Step 2? -
✔✔Find out the name of the legal owner of the property as well as the percent of
ownership.
A mechanics' lien.
Step 1: Obtain the exact legal description of the property. Step 2: Find out the name of
the legal owner of the property as well as the percent of ownership.
Step 3: Find out if the person requesting the work of improvement is the owner.
✔✔What happens after an employee's taxable wages exceed $7,000? - ✔✔After
$7,000, the employer does not pay FUTA.
✔✔A subcontractor who does not serve a preliminary notice:
A. May not serve a stop notice but may file a mechanics' lien.
B. May not file a mechanics' lien but may serve a stop notice
C. loses both stop and mechanics's lien rights
D. Loses nothing because subcontractors are not required to serve preliminary notices.
- ✔✔A subcontractor that does not serve a preliminary notice loses both stop notice and
mechanics' lien rights.
✔✔If a sales presentation is made in Spanish, the home solicitation contract: - ✔✔Must
be in Spanish.
✔✔Who pays FUTA? - ✔✔The employer pays FUTA until an employees taxable wages
exceed $7,000.
✔✔If a contractor forgets to renew his or her license on time, the expired license may
be renewed any time within _____ after its expiration without reapplying for a license
and fulfilling the exam or waiver requirements again. - ✔✔Five years.
✔✔How often are you required to pay sales tax? - ✔✔It depends on the expected
amount of taxable sales.
, ✔✔A contractor hires a subcontractor to demolish a concrete wall. Who is responsible
for supplying safety goggles. - ✔✔Subcontractor
✔✔How long does a client have to cancel a contract for repairs that are the result of an
event for which a State of Emergency was declared? - ✔✔In a state of emergency, a
client has 7 business days to cancel a contract for repairs.
✔✔All of the following are causes for disciplinary action except:
A. Allowing your license to be used by an unlined contractor.
B. Entering into a contract with another contractor who is not licensed.
C. During bankruptcy, setting obligations incurred as a contractor for less than the full
amount owed.
D. Willful or deliberate failure to pay money when due for materials or services. -
✔✔During bankruptcy, settling obligations incurred as a contractor for less than the full
amount owed.
✔✔What is the maximum allowed travel distance from any point of a work area to a fire
extinguisher "Class "A"? - ✔✔75 Feet
✔✔The CSLB has established a mandatory arbitration program of verified companies in
which the damage is: - ✔✔$12,500 or less.
✔✔A contractor usually will not be held liable for a supplier going on strike, but if your
supplier did go on strike what would you do? - ✔✔Contact the owner immediately.
✔✔When you get an approved set of plans, what should you do first? - ✔✔Read any
notes from the building department.
✔✔A(n) _____ represents a company's financial position on a specified date.
A. Balance Sheet
B. Income statement
C. Cash flow statement
D. Profit plan - ✔✔A balance sheet.
✔✔You are the qualifier for an active contractor's license. How do you inactivate the
license? - ✔✔Write to CSLB, requesting that the license be made inactive.
✔✔You are bidding as a prime contractor on a public works project. The work will not
involve construction, improvement, or repair of streets, highways, or bridges. You will
use subcontractors for part of the work. If you do not name a subcontractor for any part
of the work:
