General Contractor License Business Law and Finance 2

Question 1

A contractor signs a contract with a homeowner but later discovers the project requires a specialty license they don't hold. What is the legal status of the contract?

Accepted Answer

Void and unenforceable

Answer

A contract requiring an unlicensed activity is generally void and unenforceable, meaning the contractor cannot collect payment.

Question 2

Which financial statement shows a company's revenues and expenses over a specific period?

Accepted Answer

Income statement

Answer

The income statement (profit and loss statement) summarizes revenues and expenses over a defined accounting period.

Question 3

A subcontractor files a mechanics lien after completing work. What must typically happen for the lien to remain valid?

Accepted Answer

A lawsuit to enforce the lien must be filed within the statutory deadline

Answer

Mechanics liens must be enforced through a lawsuit within the state-mandated deadline or they expire and become unenforceable.

Question 4

Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid overtime at what rate for hours worked over 40 in a workweek?

Accepted Answer

1.5 times the regular rate

Answer

The FLSA requires non-exempt employees to receive at least 1.5 times their regular pay rate for overtime hours.

Question 5

What is the primary purpose of a surety bond in the construction industry?

Accepted Answer

To guarantee the contractor will fulfill contractual obligations

Answer

A surety bond protects the project owner by guaranteeing the contractor will complete the work as agreed or the surety will cover losses.

General Contractor License Practice Test

General Contractor License Practice Test

General Contractor License Business Law and Finance 2