CC Business and Financial Management 1

Question 1

What is the purpose of a contractor's business license separate from a trade certificate?

Accepted Answer

To authorize the business entity to legally operate and conduct commerce in a jurisdiction

Answer

A business license authorizes a company to operate in a city or county, while a contractor certificate certifies the person's trade competency.

Question 2

What does 'job costing' mean for a contractor?

Accepted Answer

Tracking all labor, material, and overhead expenses for each individual project

Answer

Job costing assigns actual costs (labor, materials, equipment, overhead) to specific projects to measure profitability and improve future estimates.

Question 3

Which financial statement shows a contractor's revenue and expenses over a period of time?

Accepted Answer

Income statement (profit and loss statement)

Answer

The income statement reports revenues and expenses over a specific period, revealing the net profit or loss for that timeframe.

Question 4

What is 'overhead' in contractor financial management?

Accepted Answer

Indirect business costs not tied to a specific project, such as office rent and insurance

Answer

Overhead includes general business expenses like rent, utilities, vehicle costs, and office staff that cannot be directly charged to a single project.

Question 5

What is the purpose of a 'Schedule of Values' on a construction project?

Accepted Answer

To break down the contract price into line items for billing and payment tracking purposes

Answer

A Schedule of Values allocates the total contract price to work categories, allowing owners to verify and approve progress payment requests.

CC - Contractor Certificate Practice Test

CC - Contractor Certificate Practice Test

CC Business and Financial Management 1