Where do you actually stand?

Every question in this diagnostic

1. Which project best fits the statutory description of a general engineering contractor's principal contracting business?

   • A A levee and river control project Correct
   • B A 40-unit apartment building
   • C A drywall, paint and flooring job
   • D A single-trade re-roof on a house

   Section 7056 of the Business and Professions Code defines a general engineering contractor by fixed works requiring specialized engineering knowledge and skill, and it names levees and river control works. The test is the kind of work, so job size does not move a building into that branch.

   Bus. & Prof. Code s. 7056

2. A licensed sole owner sells her contracting business, including its trade name and customer list. What may happen to her contractor license?

   • A It transfers with the registrar's approval
   • B It transfers once the buyer qualifies
   • C It cannot be transferred at all Correct
   • D It transfers with the trade name

   Section 7075.1 of the Business and Professions Code states that no license, whatever its type or classification, is transferable to any other person or entity under any circumstances, so buying a licensed business never buys the license.

   Bus. & Prof. Code s. 7075.1(a)

3. A responsible managing employee counts as actively engaged in the applicant's business only when working how much?

   • A 20 hours weekly, or 50 percent if lower
   • B 32 hours weekly, or 80 percent if lower Correct
   • C 32 hours weekly, or 80 percent if higher
   • D 40 hours weekly, or 80 percent if lower

   Section 7068 of the Business and Professions Code defines actively engaged as 32 hours per week, or 80 percent of the hours the business operates, whichever is less. Because the lesser figure governs, a business open 30 hours a week needs 24 hours.

   Bus. & Prof. Code s. 7068(c)(2)(B)

4. A contractor keeps its books on the cash basis. When is revenue recognized and an expense deducted?

   • A When cash is received and paid Correct
   • B When revenue is earned and expenses incurred
   • C When invoices are issued and received
   • D When the job is finally completed

   The cash basis counts revenue when the money arrives and allows an expense in the year it is paid, so the timing tracks payments rather than the work performed. A strict cash method therefore keeps neither receivables nor payables on the books.

   CSLB Law Book 2026, p. 50

5. What does a balance sheet report about the financial position of a construction business?

   • A Its condition at one point in time Correct
   • B Its profit or loss across a period
   • C Its cash receipts during the period
   • D Its estimated costs on current jobs

   The balance sheet is a statement of the financial condition of a business at a certain point in time, which is why it is often called a snapshot; the statement that summarizes what happened across a period is the income statement.

   CSLB Law Book 2026, p. 51

6. What period does an income statement cover, and what does its bottom line show?

   • A A period of time; profit or loss Correct
   • B A single date; profit or loss
   • C A period of time; total assets
   • D A single date; total assets

   The income statement covers a stretch of time, a year, a quarter or a month, and sets revenue against expenses to reach the profit or loss, so that figure is its last line and the reason the statement is prepared.

   CSLB Law Book 2026, p. 56

7. Under the California Labor Code, when are an employee's earned and unpaid wages due if the employer discharges the employee?

   • A Immediately, at the time of discharge Correct
   • B Within 72 hours of the discharge
   • C On the next regular payday after the discharge
   • D Within seven calendar days of the discharge

   Labor Code section 201 makes the wages earned and unpaid at the time of discharge due and payable immediately, so an employer that holds the final check until the next payroll run is already late and exposed to the waiting time penalty.

   Lab. Code s. 201(a)

8. An employee with no written contract for a definite period quits without giving any notice. When do that employee's wages become due and payable?

   • A At the time of quitting
   • B Not later than 24 hours after quitting
   • C Not later than 72 hours after quitting Correct
   • D On the next regular payday

   Labor Code section 202 gives the employer 72 hours to pay an employee who quits with no notice, and payment at the time of quitting is owed only where the employee gave 72 hours previous notice, so the notice is what moves the deadline.

   Lab. Code s. 202(a)

9. What does the Labor Code say about an employer collecting back wages it has already paid an employee?

   • A Lawful where the employee consents in writing
   • B Unlawful, whatever the employee has agreed to Correct
   • C Lawful up to one week of wages
   • D Lawful where the overpayment is documented

   Labor Code section 221 makes it unlawful for an employer to collect or receive from an employee any part of wages already paid to that employee, and the section carries no exception for consent, so a signed acknowledgment does not make the clawback lawful.

   Lab. Code s. 221

10. Which of the following must appear on the itemized wage statement the Labor Code requires an employer to furnish?

    • A Gross wages earned in the pay period Correct
    • B The employee's full social security number
    • C The employee's year to date vacation balance
    • D The workers' compensation carrier's name and address

    Labor Code section 226 lists nine items an accurate itemized statement must show, and gross wages earned is the first of them, while the employee's identifier may show only the last four digits of the social security number.

    Lab. Code s. 226(a)

11. A private job reaches completion. How late after that date may the owner still record an effective notice of completion?

    • A Within 10 days after completion
    • B Within 15 days after completion Correct
    • C Within 20 days after completion
    • D Within 30 days after completion

    Civil Code section 8182 permits an owner to record a notice of completion on the date of completion or within 15 days after it, so a notice recorded later does not comply and never shortens anyone's time to record a claim of lien.

    Civ. Code s. 8182(a)

12. Labor has stopped on a private job. How long must that stoppage run, and still be running, for a notice of cessation to be available?

    • A At least 10 days
    • B At least 20 days
    • C At least 30 days Correct
    • D At least 60 days

    Civil Code section 8188 requires a continuous cessation of labor for at least 30 days before the recording, and the cessation must still be running on the day the notice is recorded, so work that restarts on day 28 resets the count.

    Civ. Code s. 8188(a)

13. Section 7159 imposes its contract rules on a residential job once the aggregate price for labor, services and materials passes what figure?

    • A More than $500 Correct
    • B More than $750
    • C More than $1,000
    • D More than $5,000

    Section 7159 of the Business and Professions Code treats an agreement as a home improvement contract for that section only where the aggregate price for all labor, services, and materials exceeds $500, so the contract content rules start above that figure and splitting one job across two smaller papers does not avoid them.

    Bus. & Prof. Code s. 7159(b)

14. The home improvement article defines a senior citizen, for its cancellation rules, as an individual of what age or older?

    • A 60 years of age
    • B 62 years of age
    • C 65 years of age Correct
    • D 70 years of age

    The home improvement article defines a senior citizen as an individual 65 years of age or older, and that definition is what converts the ordinary three business day cancellation right into a five business day right.

    Bus. & Prof. Code s. 7150(b)

15. What is the ceiling on a downpayment charged under a home improvement contract?

    • A $1,000 or 10 percent, whichever is less Correct
    • B $1,000 or 10 percent, whichever is greater
    • C $2,500 or 20 percent, whichever is less
    • D 10 percent, with no dollar ceiling

    Where a downpayment is charged on a home improvement contract it may not exceed $1,000 or 10 percent of the contract amount, whichever is less, so the cap is $1,000 on a $30,000 job and $600 on a $6,000 job.

    Bus. & Prof. Code s. 7159.5(a)(3)

16. A contractor makes a substantial misrepresentation to procure a home improvement contract. Under the Contractors State License Law, what does that act amount to?

    • A A civil wrong the buyer alone pursues
    • B A misdemeanor and cause for discipline Correct
    • C Grounds for suspension after a fraud judgment
    • D An infraction carrying a $1,000 penalty

    The statute lists substantial misrepresentation in the procurement of a home improvement contract among the acts that are a misdemeanor and whose commission is cause for disciplinary action, so the same conduct draws both a criminal charge and a license action.

    Bus. & Prof. Code s. 7161(b)

17. The general prevailing rate of per diem wages must be paid on all public works except projects at or below what amount?

    • A $1,000 for the project Correct
    • B $15,000 for the project
    • C $25,000 for the project
    • D $30,000 for the project

    Section 1771 of the Labor Code requires not less than the general prevailing rate of per diem wages for all workers employed on public works except on projects of $1,000 or less, so the exemption is measured against the size of the whole project and not against the size of any one subcontract.

    Lab. Code s. 1771

18. Which employers must establish and maintain an effective Injury and Illness Prevention Program (IIPP), and in what form?

    • A Every employer, and in writing Correct
    • B Employers with 10 or more employees only
    • C Every employer, in writing or orally
    • D Only jobs above a stated contract value

    Section 3203(a) requires every employer to establish, implement and maintain an effective Injury and Illness Prevention Program, and it states that the program shall be in writing, so neither the size of the employer nor the size of the job excuses the written document.

    8 CCR s. 3203(a)

19. How often must a supervisory employee hold a toolbox or tailgate safety meeting with the crew on a California construction site?

    • A On every working day
    • B At least once each week
    • C At least once every 10 working days Correct
    • D At least once each calendar month

    Section 1509(e) requires supervisory employees to conduct toolbox or tailgate safety meetings with their crews at least every 10 working days, so a weekly meeting does more than the rule asks and a monthly one falls short of it.

    8 CCR s. 1509(e)

20. Under the California construction safety orders, what must an employer do about the personal protective equipment those orders call for?

    • A Supply it and leave use optional
    • B Require employees to use it Correct
    • C Supply it only on written request
    • D Accept a written declination from employees

    Section 1514(a) states that the employer shall require employees to use the required personal protective equipment, so the duty runs to enforcement and not only to handing the gear out, and the section provides no employee waiver of any kind.

    8 CCR s. 1514(a)