C33 Business Financial 2

Question 1

A painting contractor receives a $50,000 contract. Under California law, what is the maximum deposit the contractor can legally collect before starting work?

Accepted Answer

$1,000 or 10% of the contract price, whichever is less

Answer

California Business and Professions Code §7159.5 limits contractors to collecting no more than $1,000 or 10% of the contract price (whichever is less) as a down payment.

Question 2

Which financial document provides the best snapshot of a painting company's assets, liabilities, and owner's equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

A balance sheet shows the company's financial position at a specific date by listing assets, liabilities, and equity.

Question 3

A California painting contractor fails to pay workers' compensation premiums for 60 days. What is the most likely CSLB consequence?

Accepted Answer

The contractor's license is suspended

Answer

CSLB automatically suspends a contractor's license when workers' compensation insurance lapses, as required by California law.

Question 4

What does 'accounts payable' represent on a painting contractor's balance sheet?

Accepted Answer

Money the contractor owes TO suppliers and vendors

Answer

Accounts payable are short-term obligations the contractor owes to suppliers, subcontractors, or vendors for goods and services received.

Question 5

A C-33 contractor wants to calculate gross profit. Which formula is correct?

Accepted Answer

Gross Profit = Net Sales – Cost of Goods Sold

Answer

Gross profit equals net sales minus the direct costs of completing jobs (cost of goods sold), before subtracting operating expenses.

C33 - C-33 California Painting Contractor License Practice Test

C33 - C-33 California Painting Contractor License Practice Test

C33 Business Financial 2