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
Which financial metric best measures a contractor's ability to generate cash from operations, independent of financing and investing activities?
Answer: Operating cash flow
Operating cash flow measures cash generated from core business operations, excluding financing and investment activities, revealing true liquidity.
A contractor submits a change order request for unforeseen site conditions. Under AIA contract terms, this must typically be submitted:
Answer: Within 21 days of discovering the condition
AIA A201 requires contractors to submit claims for additional costs within 21 days of discovering the condition that gave rise to the claim.
What is the purpose of a 'lien waiver' in construction payment processes?
Answer: To release the right to file a mechanics lien upon receipt of payment
A lien waiver is a document signed by a contractor, sub, or supplier releasing their right to file a mechanics lien in exchange for payment.
A contractor uses the 'cost-plus' pricing method. This means the client pays:
Answer: Actual project costs plus an agreed fee or percentage
Cost-plus contracts reimburse the contractor for all allowable project costs plus an agreed-upon fee or markup for overhead and profit.
Which IRS form is a general contractor required to issue to an unincorporated subcontractor who was paid $600 or more in a tax year?
Answer: 1099-NEC
A 1099-NEC must be issued to non-employee individuals or unincorporated businesses paid $600 or more for services during the tax year.
A contractor's bid includes a 15% markup on direct costs. If direct costs total $80,000, what is the total bid price?
Answer: $92,000
Total bid = Direct costs × (1 + markup): $80,000 × 1.15 = $92,000.
A contractor who is dissolving their business must ensure which of the following before closing?
Answer: Settle outstanding debts, file final tax returns, and cancel licenses and permits
Proper business dissolution requires paying remaining debts, filing final tax returns, and canceling all active licenses, permits, and registrations.