General Contractor License Business and Finance Management 4

Question 1

A contractor wants to determine if a project is profitable mid-job. Which document provides the best real-time comparison of budgeted vs. actual costs?

Accepted Answer

Job cost report

Answer

A job cost report compares estimated costs to actual costs incurred, allowing mid-project profitability analysis by cost category.

Question 2

Under the completed-contract accounting method, revenue and expenses are recognized:

Accepted Answer

When the project reaches substantial completion

Answer

The completed-contract method defers all revenue and expense recognition until the project is substantially complete.

Question 3

An owner withholds 10% of each progress payment until project completion. This withheld amount is called:

Accepted Answer

Retainage

Answer

Retainage is a percentage of earned payment withheld by the owner as security to ensure the contractor completes the work satisfactorily.

Question 4

Which of the following is considered a direct cost on a construction project?

Accepted Answer

Field supervisor wages on the job site

Answer

Direct costs are directly attributable to a specific project, including on-site labor, materials, and equipment used for that job.

Question 5

A contractor's net profit margin is 5% on a $2,000,000 project. What is the net profit?

Accepted Answer

$100,000

Answer

Net profit = Revenue × Profit margin: $2,000,000 × 5% = $100,000.

General Contractor License Practice Test

General Contractor License Practice Test

General Contractor License Business and Finance Management 4