California Contractor Law and Business Exam

Under the percentage of completion method, billings greater than cumulative earnings are reported as a current liability, while billings less than cumulative earnings are reported as a current asset.

Total liabilities to net worth shows long-term creditors (banks, insurance companies) the relative proportions of assets supplied by creditors versus owners, while current and quick ratios are of principal interest to short-term lenders such as a line-of-credit loan officer.

Unemployment Insurance and Employment Training Tax are paid by the employer on wages paid, while State Disability Insurance and California Personal Income Tax are withheld from employee wages and remitted by the employer.

A service and repair contract may be used by a licensed contractor only for jobs of $750 or less that meet all four statutory requirements; if those requirements fail, the job is treated as a home improvement contract regardless of the aggregate contract price.

Administering a tetanus immunization is first aid, while other immunizations (hepatitis B, rabies), wound-closing devices such as sutures or staples, and devices with rigid stays designed to immobilize the body are medical treatment.

Total float is the leeway in starting or completing an activity without delaying the project completion date, while free float is only the delay an activity can absorb without impacting the early start of the next activity.

Overhead normally includes office rental, supplies and wages, advertising, bad debts, storage charges and other general administrative costs (and indirect items such as small tools and pickup trucks), while permits and fees, rented or owned equipment for a specific task, and payroll taxes are direct costs of the job.

Under B&P Code § 7125(a) the certificate of insurance is issued and filed by an insurer licensed to write workers' compensation insurance in California, while the Certification of Self-Insurance is issued and filed by the Director of Industrial Relations.

Under B&P Code § 7044(b), sale or offering for sale of a structure by or for the owner-builder within one year after completion creates a rebuttable presumption it was undertaken for sale, but five or more such structures within one year creates a conclusive presumption, defeating the exemption.

The B-2 residential remodeling contractor may take a single prime contract only if it requires at least three unrelated building trades or crafts, whereas the General Building classification is keyed to at least two unrelated trades.

A mechanics lien is a lien on property and cannot be filed on a public works project; the claimant's remedy against construction funds on public works is the stop notice (suit on the contract and a claim on a recorded payment bond also remain available).

A Form 941 filer who reported more than $50,000 of taxes in the four-quarter lookback period is a semiweekly schedule depositor for the year; $50,000 or less makes the employer a monthly schedule depositor, and Form 941-X adjustments do not change the lookback totals.

Bond premiums typically range from one-half percent to two percent of the contract amount, while a bank letter of credit is not a bond or a guarantee of performance but a cash guarantee customarily covering 5 to 10 percent of the contract amount.

The employee must complete and sign Section 1 no later than the first day of employment (but not before accepting a job offer), while the employer must examine documents and complete Section 2 within three business days of the employee's first day of work.

Under B&P Code § 7141.5 the registrar shall grant retroactive renewal with no break in licensure if the application, renewal fee and delinquency fee are submitted within 90 days of expiration; under § 7141 renewal is allowed any time within five years of expiration but with a break in licensure for the lapsed period, after which the person must apply as an original applicant.