Business Law and Finance Flashcards
7 cards from real General Contractor License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Law and Finance flashcards as text
A contractor signs a contract with a homeowner but later discovers the project requires a specialty license they don't hold. What is the legal status of the contract?
Answer: Void and unenforceable
A contract requiring an unlicensed activity is generally void and unenforceable, meaning the contractor cannot collect payment.
Which financial statement shows a company's revenues and expenses over a specific period?
Answer: Income statement
The income statement (profit and loss statement) summarizes revenues and expenses over a defined accounting period.
A subcontractor files a mechanics lien after completing work. What must typically happen for the lien to remain valid?
Answer: A lawsuit to enforce the lien must be filed within the statutory deadline
Mechanics liens must be enforced through a lawsuit within the state-mandated deadline or they expire and become unenforceable.
Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid overtime at what rate for hours worked over 40 in a workweek?
Answer: 1.5 times the regular rate
The FLSA requires non-exempt employees to receive at least 1.5 times their regular pay rate for overtime hours.
What is the primary purpose of a surety bond in the construction industry?
Answer: To guarantee the contractor will fulfill contractual obligations
A surety bond protects the project owner by guaranteeing the contractor will complete the work as agreed or the surety will cover losses.
When a contractor uses the 'percentage of completion' accounting method, revenue is recognized based on:
Answer: The proportion of work completed to date
Under the percentage of completion method, revenue and expenses are recognized proportionally as the project progresses.
A contractor's employee is injured on a jobsite. Under workers' compensation laws, the injured worker typically:
Answer: Receives medical and wage benefits regardless of fault
Workers' compensation is a no-fault system — injured employees receive benefits without needing to prove the employer was negligent.