California Law and Business Practice Test

Practice Questions

Question 1

Above what total contract amount (labor and materials) does construction work generally require a California contractor license?

• a. $500
• b. $750
• c. $1,000
• d. $5,000

Answer: c. Work of $1,000 or more in combined labor and materials requires a license, as does any job that needs a building permit or uses employees.

Question 2

On a home improvement contract, the down payment may not exceed:

• a. 10% of the contract price or $1,000, whichever is less
• b. 10% of the contract price or $1,000, whichever is more
• c. 25% of the contract price
• d. $500

Answer: a. California limits home improvement down payments to 10% of the contract price or $1,000, whichever is less.

Question 3

A homeowner under 65 who signs a home improvement contract at home generally has how long to cancel it?

• a. 24 hours
• b. Three business days
• c. Seven calendar days
• d. Ten calendar days

Answer: b. The standard right to cancel is three business days. Homeowners 65 or older have five business days.

Question 4

How soon must an employer report a serious workplace injury to Cal/OSHA?

• a. Within 8 hours
• b. Within 24 hours
• c. Within 3 days
• d. Within 30 days

Answer: a. Serious injuries, illnesses and deaths must be reported to Cal/OSHA immediately, and no later than 8 hours after the employer knows.

Question 5

Which written safety program must every California employer have?

• a. A hazard communication poster only
• b. An Injury and Illness Prevention Program
• c. A fleet safety program
• d. A respiratory protection program

Answer: b. Title 8 requires every employer to establish and maintain an Injury and Illness Prevention Program (IIPP).

Question 6

How often must an active contractor license be renewed?

• a. Every year
• b. Every two years
• c. Every three years
• d. Every four years

Answer: b. Active licenses expire every two years. Inactive licenses are renewed every four years.

Question 7

A license qualified by a Responsible Managing Employee must file a Bond of Qualifying Individual of:

• a. $7,500
• b. $12,500
• c. $25,000
• d. $100,000

Answer: c. The Bond of Qualifying Individual is $25,000.

Question 8

A limited liability company must file an LLC Employee/Worker Bond of:

• a. $25,000
• b. $50,000
• c. $100,000
• d. $250,000

Answer: c. LLCs need a $100,000 Employee/Worker Bond in addition to the contractor bond and liability insurance.

Question 9

Rent for the company’s main office is best classified as:

• a. A direct job cost
• b. Overhead
• c. A capital asset
• d. Profit

Answer: b. Office rent is not tied to one project, so it is an overhead (indirect) cost spread across all jobs.

Question 10

Within how many days must CSLB be notified of a change in the business’s officers?

• a. 15 days
• b. 30 days
• c. 60 days
• d. 90 days

Answer: d. Changes of personnel of record must be reported to CSLB within 90 days.

How Did You Do?

• 9 or 10 correct: keep practicing with full timed tests to stay sharp.
• 6 to 8 correct: review the sections you missed, then try a new set of questions.
• 5 or fewer: start with the study guide and a structured plan before more practice tests.

See the Law and Business study guide for every section and its weight.

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