Business and Finance Management 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 and Finance Management flashcards as text
A contractor's overhead rate is calculated by dividing total overhead costs by which figure?
Answer: Direct labor costs
Overhead rate is calculated by dividing total overhead costs by direct labor costs to allocate indirect expenses to projects.
Which financial statement shows a contractor's assets, liabilities, and equity at a specific point in time?
Answer: Balance sheet
The balance sheet is a snapshot of financial position at a given date, showing what the company owns versus what it owes.
A subcontractor fails to complete work and causes a project delay. Under a typical subcontract agreement, the general contractor may:
Answer: Back-charge the subcontractor for resulting costs
Back-charges allow the GC to deduct costs incurred due to a subcontractor's default from amounts owed to that subcontractor.
What does the term 'accounts receivable turnover' measure in a contracting business?
Answer: How efficiently the company collects money owed to it
Accounts receivable turnover measures how many times receivables are collected over a period, indicating billing and collection efficiency.
A contractor purchases a $120,000 piece of equipment with a 5-year useful life and $0 salvage value. Using straight-line depreciation, the annual depreciation expense is:
Answer: $24,000
Straight-line depreciation divides cost by useful life: $120,000 ÷ 5 = $24,000 per year.
Which type of bond guarantees that a contractor will pay subcontractors and material suppliers on a project?
Answer: Payment bond
A payment bond protects subcontractors and suppliers by guaranteeing they will be paid even if the general contractor defaults.
When preparing a job cost report, 'cost to complete' refers to:
Answer: Estimated remaining costs needed to finish the project
Cost to complete is the projected amount still needed to finish the project, used to forecast final job profitability.