Alabama Business & Law Examination (formerly General Contractor Examination) Practice Exam
Free Practice Exam
Test your knowledge with 10 questions from our pool of 20 free questions.
- 10 questions per attempt
- 30 minute time limit
- Unlimited attempts
- A new mix each time
- Instant results
Full Practice Exam
Complete exam simulation matching the real PSI test format.
- 50 questions (same as real exam)
- 120 minute time limit
- 11 topic areas covered
- 302 questions in pool
- Detailed explanations
Texts preferred · 9am–9pm Central
Alabama Business & Law Examination (formerly General Contractor Examination) Practice Exam Guide
What's on the exam
Questions per topic, out of 50This exam is about running a contracting business in Alabama, not about swinging a hammer. The outline covers licensing rules and classifications, estimating and bidding, mechanics' liens, financial management, payroll and taxes, personnel and labor law, project management, contracts, business structures, risk management and insurance, and safety recordkeeping and environmental rules. It is an open book exam, so knowing where the answer lives in your reference matters as much as knowing the answer cold.
You have two ways to practice here. The free practice exam gives you 10 questions per attempt, and you can retake it as often as you want. The full practice exam gives you 50 questions on a 2 hours clock, drawn fresh from our question bank every time you sit it, so repeat attempts do not turn into memorizing a fixed set. Work the free set first to find your weak topics, then run full timed attempts.
Licensing 8 items
This is the biggest block. Know the dollar thresholds: a license is required when the cost of the undertaking, including labor and materials, is $50,000 or more (Page 3-2), and a subcontractor is one performing work of $50,000 or more under contract to a general contractor (Page E-1). Know the major classifications list (Pages 3-2 to 3-3), the 51% regulation measured by cost (Alabama Licensing Board Rules and Regulations, Page F-9), the five-member board (Alabama Licensing Board for General Contractors Licensing Law, Page E-7), quarterly meeting months (Page 3-1), Classification A's $100,000 bid limit (Page 3-4), the $300 new application payment (Page 3-3), and the four reciprocity states (Page 3-5).
Estimating and Bidding 5 items
Know what gets added after materials and labor in a quantity take-off — subcontractor fees, labor burden, project overhead, project equipment, contingencies, allowances, company overhead and profit (Page 7-3). Know project overhead items like temporary storage versus company overhead items like office rent, accounting and legal fees (Page 7-6). Practice unit-price math such as 2,000 square feet at $2.00 (Page 7-7). Know that job-specific equipment, like a crane to set an air handler, is a direct cost (Page 7-4), and the definition of bid shopping (Page 7-2).
Liens 2 items
Only two scored items. A material supplier who serves proper written notice before the material is used can claim a lien for the full price regardless of the unpaid balance due the prime contractor (Page 16-1). Prime contractors file within six months after the last work or labor was furnished (Page 16-2). Action to foreclose must begin within six months after filing (Page 16-3). To bond around a lien, post the claim amount plus 8 percent interest for three years plus $100 toward court costs (Page 16-2).
Financial 5 items
Expect the six steps of the accounting cycle in order, from classifying and recording transactions through analyzing financial statements (Page 14-1). Know the balance sheet equation, Assets = Liabilities + Owners' Equity (Page 14-3). Know that the completed contract method reports income or loss in the year the contract is completed (Page 14-8), and what a high debt ratio signals about overextending debt (Page 14-7). Know how retainage works on a progress billing: bill the mobilization amount, then subtract the retainage percentage to get the net payment.
Payroll and Taxes 6 items
The FLSA workweek is 168 hours across seven consecutive 24-hour periods (Page 11-4). Employers are generally liable for both state and federal unemployment taxes if they pay wages totaling $1,500 or more in any quarter of a calendar year, or had at least one employee during any day of a week during 20 weeks in a calendar year (Page 15-5). Report $600 or more paid to independent contractors on Form 1099-NEC; before tax year 2020 that was Form 1099-MISC, and the reference covers it in its Information Returns - 1099-MISC section (Page 15-5). Semiweekly depositors with a Wednesday, Thursday or Friday payday deposit on Wednesday (Page 15-4). Deposits 1–5 days late carry a 2% penalty (Page 15-5). Form W-2 goes to employees by January 31 (Page 15-6). Alabama's corporate income tax rate is 6.5 percent (Page 15-7).
Personnel and Labor 5 items
Federal employment law plus a few Alabama specifics. Know the 168-hour workweek definition (Page 11-4), the $25.00 fine per incident for failing to comply with Alabama's new hire reporting law (Page 11-2), and the civil money penalty of up to $1,100 for each willful or repeated minimum wage or overtime violation (Page 11-5). A minor 14 or 15 years old may not work more than 18 hours a week when school is in session (Page 11-2). ADEA protects individuals age 40 or older (Page 11-8). OSHA records are kept five years (Page 12-4).
Project Management 3 items
The critical path is the sequence of tasks that determines the duration of the project; delay a critical path task one week and the project slips one week (Page 9-5). Contingency time is a buffer between tasks that protects against unforeseen delays (Page 9-2). The critical path method illustrates the interdependent relationship of tasks; bar chart and calendar scheduling do not show interdependencies (Pages 9-4 to 9-5). Daily reports carry factual information only, never personal comments, so they hold up in a dispute (Page 9-8).
Contracts 6 items
Start with the four required elements: offer and acceptance, consideration, competent parties, legal purpose (Page 8-1). Written documentation is recommended, not required. Under a lump-sum contract the contractor assumes the risk for cost overruns (Page 8-5). Change orders add to, delete from or alter the work in the construction documents (Page 8-7). Arbitration binds the parties; mediation does not (Page 8-8). Design/build means one company from start to finish (Page 8-6). Know progress payment requirements (Page 8-3) and the criteria for evaluating subcontractors (Page 13-1).
Business Organization 2 items
Corporation names must contain "Corporation" or "Incorporated" or the abbreviation "Corp." or "Inc." (Page 2-4). In a general partnership, if a general partner leaves or dies the partnership dissolves and assets are sold or distributed, creditors first and partners second (Page 2-2). An S Corporation is limited to no more than 100 shareholders who are citizens or legal residents of the U.S. (Page 2-4). The LLC is the hybrid structure sharing traits of sole proprietorships and corporate identities (Page 2-4).
Risk Management 4 items
Insurance and bonds. All-risk builders' risk covers direct loss by perils not specifically excluded; named peril policies list what is covered, such as fire and lightning (Page 4-4). Bond language contains four basics: total dollar amount, length of the bond, requirements for notice of defect or lack of maintenance, and bond enforcement (Page 4-7). The Miller Act requires performance and payment bonds on federal construction projects valued at greater than $100,000 (Page 4-9), while an Alabama public entity contract exceeding $50,000 requires them (Page 4-9).
Safety Recordkeeping and Environmental 4 items
Employers covered by OSHA with more than 10 employees maintain Forms 300, 300A and 301 (Page 12-3). Exposure records for toxic substances and harmful physical agents are kept 30 years; medical records for employment plus 30 years (Page 12-4). Alabama employers with a qualifying drug-free workplace program earn a credit on their workers' compensation premium (Page 12-3). Call 811 to reach the Common Ground Alliance for underground utility locates (Page 12-6). Asbestos notification goes to ADEM 10 weekdays before disturbing regulated asbestos-containing material or starting demolition (Page 12-11).
Sample 1 — Licensing
Question: Which of the following is NOT a major classification for contractor licensing?
- A. Building Construction
- B. Highways and Streets
- C. Residential Construction
- D. Municipal and Utility
Correct Answer: C
The major classifications are Building Construction, Building Construction under Four Stories (BCU4), Highways and Streets, Municipal and Utility, Heavy and Railroad Construction, and Specialty Construction. Residential Construction is not on that list, so it is the answer. Licensing carries 8 items, so memorize the six major classifications. Citation: NASCLA Contractors Guide Alabama, Pages 3-2 to 3-3.
Sample 2 — Payroll and Taxes
Question: How many hours constitute a workweek under the Fair Labor Standards Act?
- A. 168 hours
- B. 184 hours
- C. 176 hours
- D. 160 hours
Correct Answer: A
A workweek under FLSA is a period of 168 hours during seven consecutive 24-hour periods. That is 24 times 7. The workweek is a fixed block of time, not the hours an employee actually works. Know this one on sight; it shows up under both Payroll and Taxes and Personnel and Labor. Citation: NASCLA Contractors Guide Alabama, Page 11-4.
Sample 3 — Contracts
Question: What happens if a contract cannot be clarified based on the actions of the parties when a provision is disputed?
- A. The contract is void
- B. The court will rewrite the provision
- C. A new contract must be negotiated
- D. The interpretation will go against the party who wrote it
Correct Answer: D
If the disputed provision is vague and the parties' conduct does not clear it up, the interpretation goes against whoever wrote it. That is the practical reason to write your own contract language carefully — ambiguity you created lands on you. Citation: NASCLA Contractors Guide Alabama, CONTRACT MANAGEMENT chapter — Legal Interpretation section (Page 8-10).
The real exam requires 70% correct. Score your practice attempts against that same bar, but do not read too much into the first one. Your first full attempt is a diagnostic, nothing else. It tells you which topics you can already answer from memory and which ones you were hunting for in your book.
Use the topic breakdown, not the total. A score of 68 percent means very different things depending on where the misses sit. Look at where the items are: Licensing is 8 items, Contracts and Payroll and Taxes are 6 each, Estimating and Bidding, Financial, and Personnel and Labor are 5 each. Fix a weak Licensing topic and you move your total more than fixing Liens or Business Organization, which are 2 items apiece.
That said, do not write off the small topics. Together, Liens and Business Organization carry 4 scored items.
Once you are clearing the pass mark on timed attempts with room to spare, stop drilling and start rehearsing your book. Practice finding the lien deadlines and the classification list in under thirty seconds.
Mixing up the $50,000 and $100,000 thresholds. Licensing uses $50,000 for the license requirement and the subcontractor definition (Pages 3-2 and E-1), but Classification A's bid limit is $100,000 (Page 3-4). Risk Management adds two more: Miller Act bonds above $100,000 and Alabama public contracts exceeding $50,000 (Page 4-9). Learn the four thresholds together.
Skipping steps in the quantity take-off. The reference lists the whole sequence added after materials and labor (Page 7-3): subcontractor fees, labor burden, project overhead costs, project equipment, contingencies, allowances, company overhead and profit. Read every option before you pick.
Treating every overhead cost the same. Office rent, accounting fees and legal fees are company overhead. Temporary storage, bonds, temporary office, security, utilities, dumpsters and portable toilets are project overhead (Page 7-6).
Confusing mediation with arbitration. Under Contracts, arbitration produces a legally binding decision; mediation does not (Page 8-8). Under a lump-sum contract, the contractor assumes the risk for cost overruns (Page 8-5).
Burning clock on open-book lookups. You get 2 hours for 50 questions, which works out to about 2 minutes 24 seconds per question. Answer what you know first, flag the lookups, and come back.
| Questions | 50 questions |
| Time limit | 2 hours |
| Passing score | 70% correct |
| Books in the exam room | Open book |
| Exam fee | $96 |
- Results are given immediately on screen and emailed, with a diagnostic report of strengths and weaknesses for candidates who do not pass.
- You may take the examination an unlimited number of times during the 1-year period, paying the fee for each registration.
Source: State of Alabama General Contractors Candidate Information Bulletin, Updated 1/23/26. Check the bulletin before test day: fees and rules can change.