C33 Business Financial 5

Question 1

A California painting contractor is required to keep financial and business records for how long after project completion in case of a CSLB audit?

Accepted Answer

5 years

Answer

The CSLB requires contractors to maintain project and financial records for at least five years after project completion.

Question 2

What does the term 'retainage' mean in a California construction payment context?

Accepted Answer

A percentage of each progress payment withheld until project completion

Answer

Retainage is a portion (commonly 5–10%) held back from each progress payment and released after satisfactory project completion.

Question 3

A painting contractor's bond required by the CSLB primarily protects:

Accepted Answer

Consumers who suffer financial harm from the contractor's actions

Answer

The CSLB contractor's license bond exists to compensate consumers who are financially harmed by a licensed contractor's defective work or fraud.

Question 4

Which accounting method records income when it is earned and expenses when they are incurred, regardless of when cash changes hands?

Accepted Answer

Accrual basis accounting

Answer

Accrual accounting recognizes revenue when earned and expenses when incurred, providing a more accurate picture of financial performance for larger contractors.

Question 5

A painting contractor receives payment from a client but uses the funds for personal expenses instead of paying subcontractors. Under California law, this conduct may constitute:

Accepted Answer

Misappropriation of construction funds, subject to criminal charges

Answer

Diverting funds meant for subcontractors to personal use can be prosecuted as misappropriation or theft under California Penal Code, in addition to CSLB disciplinary action.

C33 - C-33 California Painting Contractor License Practice Test

C33 - C-33 California Painting Contractor License Practice Test

C33 Business Financial 5