Florida General Contractor Florida Contractor Business Management 2 — Questions and Answers
Question 1: A Florida contractor wants to reduce the tax withheld from an employee's paycheck. Which form does the employee complete to set federal income tax withholding?
- IRS Form W-4 (Correct answer)
- IRS Form W-2
- IRS Form 1099
- IRS Form 941
Correct answer: IRS Form W-4
Employees complete Form W-4 to indicate withholding allowances that determine federal income tax withheld.
Question 2: Under Florida law, when must a contractor generally provide a written contract for a residential improvement exceeding $2,500?
- When the project exceeds $2,500 (Correct answer)
- Only when the owner requests it
- Only for new construction
- Never, verbal is sufficient
Correct answer: When the project exceeds $2,500
Florida requires a written contract for residential improvements exceeding $2,500 with required disclosures.
Question 3: What financial statement shows a contractor's assets, liabilities, and owner's equity at a specific point in time?
- Balance sheet (Correct answer)
- Income statement
- Cash flow statement
- Job cost report
Correct answer: Balance sheet
The balance sheet reports assets, liabilities, and equity as of a specific date.
Question 4: A contractor uses the percentage-of-completion method. If a job is 40% complete on a $500,000 contract, how much revenue should be recognized?
- $200,000 (Correct answer)
- $500,000
- $40,000
- $300,000
Correct answer: $200,000
Revenue recognized equals the percentage complete times total contract value: 40% of $500,000 = $200,000.
Question 5: Which Florida tax must a contractor typically collect on retail sales of tangible personal property?
- Sales and use tax (Correct answer)
- Federal excise tax
- Documentary stamp tax
- Intangible tax
Correct answer: Sales and use tax
Florida sales and use tax applies to retail sales of tangible personal property.
Question 6: What is the primary purpose of a contractor maintaining workers' compensation insurance in Florida?
- Cover employee job-related injuries (Correct answer)
- Protect against property theft
- Insure completed work defects
- Cover owner's personal liability
Correct answer: Cover employee job-related injuries
Workers' compensation covers medical costs and lost wages for employees injured on the job.
Question 7: A contractor's current ratio is calculated by dividing current assets by what?
- Current liabilities (Correct answer)
- Total equity
- Fixed assets
- Net income
Correct answer: Current liabilities
The current ratio equals current assets divided by current liabilities, measuring short-term liquidity.
Florida General Contractor Florida Contractor Business Management 2
A Florida contractor wants to reduce the tax withheld from an employee's paycheck.
Which form does the employee complete to set federal income tax withholding?