Alabama Business & Law Examination (formerly General Contractor Examination)
Practice at the real exam's pace
Every practice exam shows your time per question against the real exam's clock (2:24 here), and each topic lands in one of these:
What's on the exam
Questions per topic, out of 50Topics
Licensing
Key Concepts
License thresholds - A general contractor's license is required when the cost of the undertaking, including labor and materials, is $50,000 or more (Page 3-2; §34-8-1(a)). - For swimming pools, a license is required where the cost of the undertaking exceeds $5,000 (Page 3-2; §34-8-1(b)). - A subcontractor is one who performs work where the cost of the undertaking is $50,000 or more under contract to a general contractor or another subcontractor (§34-8-1(c), Page E-1). Subcontractors may bid before receiving a license but must be licensed once work commences (Page 3-4). - Labor and materials cannot be separated, and a contract cannot be divided to evade the law: parts of less than $50,000 that combine to $50,000 or more are treated as one contract…
Estimating and Bidding
Alabama Business & Law Examination — Bidding and Estimating (NASCLA Contractors Guide Alabama, Chapter 7)
Key Concepts
Alabama licensing and bidding thresholds (Page 7-2, §34-8-8 / §34-8-7) - The awarding authority is responsible for determining whether a contractor is properly licensed before permitting him or her to submit a bid or offer to construct a project of $50,000 or more (in excess of $5,000 for swimming pool contractors). - All architects, engineers, and awarding authorities must include notification in their bid specifications that a general contractor's license is required before a prime contractor can qualify to submit bids in Alabama (§34-8-8). - A prime contractor may receive bids from unlicensed subcontractors; subcontractors must be licensed before beginning work (§34-8-7). - A prime contractor awarding a subcontract…
Liens
Key Concepts
What a lien does. Mechanics' and materialmen's liens "cloud" the title to real property and stop the owner from selling with clear title; the lien may be foreclosed, and the court can order the property sold and the proceeds used to pay the contractor, subcontractor, or material supplier — even if the owner has already paid a general contractor, meaning the owner may have to pay twice (Page 16-1). The governing law is the Alabama Code, Title 35, Chapter 11 (Page 16-1).
Who is entitled. Alabama statutes designate lien rights for every contractor, subcontractor, laborer, or material supplier who supplies labor, services, material, fixtures, or machinery in the construction or repair of an improvement to real estate; lienors can also include employees of the…
Financial
Alabama Business & Law Examination
Key Concepts
Accounting cycle (Page 14-1). Six steps: 1. Classifying and recording transactions, 2. Posting transactions, 3. Preparing a trial balance, 4. Preparing an adjusted trial balance, 5. Preparing financial statements, 6. Analyzing financial statements.
Accounts and journals (Page 14-2). Five basic account types: Asset, Liability, Equity, Income, Expense. Chart of accounts: 1000-1999 Assets; 2000-2999 Liabilities; 3000-3999 Equity; 4000-4999 Revenue; 5000-5999 Cost of Goods Sold; 6000-6999 Expenses; 7000-7999 Other Revenue; 8000-8999 Other Expenses. Journals: cash receipts and sales, purchases, cash disbursements, payroll, and general (non-cash transactions). Posting transfers entries from the journal to the general ledger. Debits increase Assets and Expenses; credits increase Liabilities, Equity, and Income.
Payroll and Taxes
Alabama Business & Law Examination
Key Concepts
Employer Identification Number (Page 15-1, Employer Identification Number section) - The EIN is a 9-digit number issued by the IRS, arranged 00-0000000. - Only two entity situations do not need an EIN: sole proprietorships with no employees that file no excise or pension tax returns, and LLCs with a single owner (where the owner files employment tax returns). Those owners use their social security number as the taxpayer identification number. - All other entities, including partnerships, are required to obtain an EIN. - Four application methods: call the Business and Specialty Tax Line at (800) 829-4933; fax Form SS-4; mail Form SS-4; apply online at www.irs.gov.
Personnel and Labor
Key Concepts
New hire reporting (Page 11-2, New Hire Reporting section) - PRWORA, enacted by Congress in 1996 as part of welfare reform, requires employers in all 50 states to report new hires and rehires to a state directory. - Report all new employees to the Alabama New Hire Reporting Program no later than seven days from the date of hire or rehire. - Employers reporting magnetically or electronically must submit two monthly transmissions 12 to 16 days apart. - Failure to comply could result in a $25.00 fine per incident. - Required data: employer's name, address and federal identification number; employee's name, address, Social Security number, first day of work; and a statement of whether the employee is a hire or rehire.
Project Management
Key Concepts
Scheduling process. During scheduling, you determine the sequence of tasks, activity duration, contingency time, task time ranges, and float time (NASCLA Contractors Guide Alabama, Ch. 9, "Final Inspection" summary; Scheduling Process section, Pages 9-1 to 9-2).
- Sequence of tasks: some tasks run at the same time, others must precede the next — interior and exterior paint may be applied at the same time, but drywall must be completed before paint (Page 9-1).
- Activity duration depends on size of the project, labor hours estimated, and length of time dedicated to the task each day. "If a task is estimated at four hours but your crew only has two hours per day to work on the task, the activity duration is two working days"…
Contracts
Key Concepts
Required contract elements (Required Contract Elements section, Page 8-1). Four elements must be in effect to make a contract binding: offer and acceptance, consideration, competent parties, legal purpose. Written documentation is not a required element, though it is strongly recommended.
Offer and acceptance (Offer and Acceptance / Acceptance sections, Pages 8-1 to 8-2). A bid or estimate is an offer. The acceptance time frame is typically 30 days but should be stated in the offer; if no deadline is stated, the offer expires in a "reasonable time," which is up to court interpretation on an individual case basis. Acceptance is generally made by signing the offer. A counteroffer is not acceptance — acceptance exists only when both parties agree to the terms.
Business Organization
Key Concepts
Sole proprietorships — Simplest form to set up; if operating under a name other than your own, a fictitious name certificate is typically filed at a local or state government office. You own the assets, bear personal liability for all actions taken in the business's name, and report net income as ordinary income; sole proprietors do not pay corporate income taxes. The business is terminated upon the owner's death. (Chapter 2 — Sole Proprietorships section)
Partnerships — A general partnership "can be formed through an oral agreement, but it is recommended that a written partnership agreement be made." A limited partnership consists of one or more general partners and one or more limited partners; limited partners "have no personal liability" and are liable only…
Risk Management
Key Concepts
Risk management benefits. Good risk management provides three benefits: lower business and liability insurance premiums, reduced chances of being sued, and improved chances of prevailing in a lawsuit (Page 4-1, MANAGING RISK — Risk Management Benefits).
All-risk vs. named peril builders' risk. All-risk coverage provides for direct loss by those perils not specifically excluded by the policy and generally covers almost all risks, including theft, vandalism, accidental losses, and damage or destruction; construction must be in progress for coverage to exist. Named peril policies have narrower coverage and specify the perils covered — typically fire and lightning, but also wind damage, explosion, water damage, terrorism, or earthquake (Pages 4-3 to 4-4, Property Insurance).
Safety Recordkeeping and Environmental
Alabama Business & Law Examination — Jobsite Safety and Environmental Factors (Chapter 12)
Key Concepts
Applicable OSHA standards (Safety Standards, Page 12-1): Three standards apply to construction — 29 CFR 1926, Safety and Health Regulations for the Construction Industry; 29 CFR 1910, Occupational Safety and Health Standards; and 29 CFR 1904, Recording and Reporting Occupational Injuries and Illnesses. OSHA was established by the Occupational Safety and Health Act of 1970 (OSH Act).
Alabama's status (Safety Standards, Page 12-2): Alabama does not have a state-adopted OSHA plan and falls under federal OSHA laws. The University of Alabama's Safe State OSH Consultation Program assists employers with federal OSHA compliance.