1 Exam Prep Business and Finance Practice Test 10

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1 1 Exam Prep Business and Finance Practice Test What is an advantage of a bad debt reserve? A. it reduces tax liability for earned profit B. it increases assets C. it increases profits D. it simplifies accounting procedures 2. Which of the following causes for adjustment to a contract price would not be considered permissible? A. defective construction caused by a subcontractor B. misinterpretation of the plans by the owner C. defective plans D. failure of the owner to make a timely selection of material 3. Who is eligible for Small Business Administration (SBA) loan programs? A. all construction businesses located in the United States B. corporations operated on a non-profit basis C. businesses with fewer than 100 employees regardless of sales volume D. construction businesses with annual sales volume of $17 million and less than 100 Employees 4. What can a contractor determine at the break-even point? A. various yields for different types of jobs B. the kind of work that is needed to reach a volume goal C. growth potential D. the least amount of sales needed to break even, assuming costs and expenses remain reasonably constant 5. A contractor with serious cash flow problems, but with high volume of work. A. should first try to improve cash flow through budgeting B. should first try to increase the volume of work C. should first try to lower the volume of work D. would likely qualify for a loan 1

2 6. According to Builder's Guide to Accounting, an equity account is best described as the. A. original value of the business B. original inventory of the business C. original investment of the owners D. total value of loans from the bank 7. A recorded Notice of Commencement will expire in 90 days unless. A. Notice to Owners are filed B. work has commenced C. first payment to contractor is released D. first inspection is made 8. When making a claim of lien, you must send a sworn statement of account within. A. 90 days after demand of statement has been made B. 30 days after demand of statement has been made C. 45 days before demand of statement has been made D. 15 days before demand of statement has been made 9. Removable partitions which were included in the contract are deleted by a change order at a net decrease of $10,000 in the general contractor's cost. The contract sum should be decreased by. A. $10,000 only B. $10,000 less reasonable mark-up for overhead only C. $10,000 less reasonable mark-up for overhead and profit D. $10,000 plus administrative costs 10. What are two types of manpower estimates? A. comparative and historical B. graphic and detailed C. preliminary and detailed D. preliminary and historical 11. Which of the following is NOT insurance? A. Surety Bonding B. Contractors Equipment Floater C. Transportation Policy D. Inland Marine Insurance 2

3 12. Employers who want to provide Workers' Compensation Insurance by issuing themselves as individual, "free standing," self-insureds must meet all the following criteria, except. A. at least 3 years of financial experience under the same ownership and management B. current assets to liabilities ratio of at least 2:1 C. net assets of at least $500,000 D. total assets of three times the annual premiums 13. Job costing not only allows you a means for cost control, but also. A. allows involvement in all projects B. allows you to purchase materials for future jobs C. controls indirect cost D. helps prevent employee theft 14. According to Florida Contractors Manual, who has the responsibility to initiate accident prevention programs? A. only general contractor B. employer C. project engineer D. safety engineer 15. According to Florida Unemployment Compensation Laws, an employer who fails to file reports when due will be assessed a penalty of per report for each month (or fraction thereof) that the report is delinquent. A. $25 B. $50 C. $75 D. $ A construction company that is not tax exempt has received a materials only bid from the supplier in the amount of $3,500. Who is responsible for the collection and reporting of the state sales tax when the material is purchased? A. the supplier B. the owner of the building C. the construction company only D. no one; no sales tax is required 3

4 17. A "secondary" qualifying agent is responsible for. A. the company's financial matters only on jobs where the agent's license was used to obtain the permit B. supervision of field work at sites where the agent's license was used to obtain the permit C. items designated by the primary qualifying agent of the company D. all qualifying matters as qualifying agent when the original qualifier leaves the company 18. If an owner fails to file a Notice of Commencement on a project with a total cost of $10,000, the contractor will initially be unable to obtain. A. approval of Building Inspections B. Certificate of Completion C. final payment from the owner D. final Certificate of Occupancy 19. According to Florida Contractors Manual, all the following should be considered overhead when tracking job costs except. A. performance bond premium B. professional fees C. administrative salaries D. office expenses 20. According to Florida Contractors Manual, residential rental property is depreciated over a period of. A. 25 years B years C years D. 39 years 21. According to Builder's Guide to Accounting, regarding the inventory value, individual labeling is done for what cost basis method? A. first in first out B. last in first out C. perpetual inventory D. specific cost 22. What is the purpose of Supplementary Record of Occupational Injuries and Illnesses (OHSA No. 301)? A. to provide additional information about the employer listed in the log B. to report the safety measures taken to prevent future accidents C. to summarize the information that has been recorded in the log D. to provide additional information on each case that has been recorded in the log 4

5 23. What type of liability insurance protects the contractor from loss due to accidents causing bodily injury or property damage to members of the public after construction work has been finished and put to its intended use? A. Builders Risk B. Business Interruption C. Completed Operations D. Manufacturers' and Contractors' 24. According to AIA-A401, all the following are responsibilities of the subcontractor except to. A. agree that the architect will have the authority to reject work B. submit shop drawings, product data, samples, and similar submittals C. furnish periodic progress reports to the contractor D. make sure the owner and the contractor agree on a contract price 25. When a contractor writes off the expense of a piece of equipment over time, that process is called A. accelerated depreciation B. depreciating a fixed asset C. depreciation of intangible property D. depreciating a current asset 26. Under Chapter 489, when a locally licensed or registered contractor challenges the local jurisdiction's recommended penalty for board action, the challenge must be presented to the. A. Construction Industry Licensing Board B. Department of Business and Professional Regulation C. Department of Community Affairs. D. local building department 27. According to Builder's Guide to Accounting, the volume of business that must be maintained in order to avoid a loss is the. A. percentage of sales B. net worth C. available cash D. breakeven point 5

6 28. A certified contractor is qualifying a company operating in the contractor's own name. The contractor wants to close that company and start qualifying a new company operating as Contracting Company. The contractor can start operating as Contracting Company. A. 15 days after sending the application to the Board B. 30 days after sending the application to the Board C. as soon as they have filed all the proper paperwork with the Board D. as soon as the Board approves the new business organization 29. Which inventory cost-basis valuation method assumes that the first materials purchased are the first used? A. specific cost B. first in first out C. first in last out D. last in first out 30. Contractors must maintain complete financial and business records, kept in the regular course of business for the immediately preceding. A. 2 years B. 3 years C. 5 years D. 7 years 31. The first step in preparing a financial statement at the end of an accounting period is to put together. A. a supplementary schedule B. a trial balance C. an income statement D. the closing adjustments 32. Florida state and federal unemployment taxes on paid wages. A. are paid wholly by the employer B. may be partially deducted from the employee wages C. may be deducted as a whole from employees wages D. may be deducted from sub-contractor progress payments 33. Goodwill is an example of. A. an intangible asset B. retained earnings C. a current liability D. equity 6

7 34. All the following are advantages of leasing except. A. an immediate tax deduction is available for the cost of monthly leases B. the equipment will receive regular use C. no large investment or financing commitment is required D. it allows the contractor the chance to evaluate equipment before buying it 35. If there are insufficient funds from the contract price to pay all valid liens and all were attached at the same time, who takes first priority? A. contractor B. laborers C. suppliers D. everyone except suppliers 36. When making a FUTA payment to the IRS, one must send it. A. as a separate payment B. with your FIT payment C. with your medicare payment D. with your social security payment 37. According to Florida Contractors Manual, which of the methods below is NOT one of the three traditional methods of construction scheduling grouped under network analysis? A. Critical Path Method (CPM) B. Critical Path Analysis (CPA) C. Cost Control Systems (CCS) D. Project Evaluation and Review Technique (PERT) 38. According to Builder's Guide to Accounting, which one of the following assets is eligible for depreciation? A. land B. warehouse C. inventory D. intangible property 39. What is the minimum liability insurance coverage required by state law for a certified general contractor? A. $25,000 B. $50,000 C. $100,000 D. $300,000 7

8 40. According to AIA Document A201, the contract documents consist of. A. agreements between the contractor and all subcontractors specifying their relationships with the owner B. agreements between owner and architect, drawings, and specifications C. agreements between owner and contractor, conditions of the contract and drawings and D. materials to be used by contractors and subcontractors 41. While completing the punch list, the architect discovers that the wrong carpet was installed. The owner has decided to accept the carpet, but according to AIA documents, he has the right to. A. demand that the contractor furnish him with rolls of the specified carpet B. penalize the contractor for not following the specifications C. reduce the contract sum by an amount which is appropriate and equitable D. specify what deduction he will be required for accepting the wrong carpet 42. If after exhaustive effort a contractor fails to respond to or disagrees with the method of adjustment in the contract sum for changes, the architect can determine the change amount. According to AIA, which expense is not allowed as a reimbursable cost? A. cost of material transportation B. fringe benefits C. hand tools (rented or owned)' D. rental cost of machinery and equipment 43. According to Florida Unemployment Compensation Employer Handbook, an employer who has outstanding indebtedness billed prior to the four quarters immediately preceding the effective date of rating will be assigned a maximum tax rate of. A B C D According to Florida Unemployment Compensation Employer Handbook, sole proprietors are. A. required to have unemployment compensation insurance B. not considered as eligible for unemployment compensation C. considered when determining an employer's liability D. exempt if their gross is $10,000 or more per year 8

9 45. The Omnibus Budget Reconciliation Act of 1990 allows a maximum civil penalty of for each willful or repeated OSHA violation. A. $7,500 B. $12,000 C. $50,000 D. $70, How many banking days does a semi-weekly depositor have to deposit withholding taxes? A. 1 B. 2 C. 3 D Good inventory control. A. increases exposure to theft B. maximizes the need for storage space C. maximizes investment in capital inventory expenditures D. reduces taxes and insurance costs 48. Which one of the following is a variable overhead expense? A. utilities B. postage C. labor payroll taxes D. rent 49. According to Florida Contractors Manual, short term schedules on construction projects are a detailed explanation of the next. A. 7 days B. 2 weeks C. 4 weeks D. 6 weeks 50. When the plotted job progress curve does not swing up soon enough, the contractor. A. will make a higher overall job profit B. will finish early C. needs to delay scheduled labor and material D. has over-estimated the cost 9

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11 1 Exam Prep Business and Finance Practice Test 10 Answer Key 1. A Page 64 Builder's Guide to Accounting 2. A Ch. 8 Florida Contractors Manual 3. D Page 318 Builder's Guide to Accounting 4. D Page 179 Builder's Guide to Accounting 5. A Page 174 Builder's Guide to Accounting 6. C Page 253 Builder's Guide to Accounting 7. B Ch. 9 Florida Contractors Manual 8. B Ch. 9, (2) Florida Contractors Manual 9. A Section AIA Document A C Ch. 10 Florida Contractors Manual 11. A Ch. 4 Florida Contractors Manual 12. B Ch. 6 Florida Contractors Manual 13. A Ch. 3 Florida Contractors Manual 14. B Ch. 7 Florida Contractors Manual 15. A Ch. 5 Florida Contractors Manual 16. A Ch. 3 Florida Contractors Manual 17. B Ch. 2, (2)(e) Florida Contractors Manual 18. A Ch. 9, (d) Florida Contractors Manual 19. A Ch. 3 (Chart) Florida Contractors Manual {Performance bond premium is a direct cost and not an overhead costs} 20. B Ch. 3 Florida Contractors Manual 11

12 21. D Page 120 Builder's Guide to Accounting 22. D Ch. 7 Florida Contractors Manual 23. C Ch. 4 Florida Contractors Manual 24. D Section Document A B Page 252 (only fixed assets are depreciated) Builder's Guide to Accounting 26. A Ch. 2, 61G (2)(h) Florida Contractors Manual 27. D Page 179 Builder's Guide to Accounting 28. D Ch. 2 Florida Contractors Manual 29. B Page 120 Builder's Guide to Accounting 30. B Ch. 2, (1) Florida Contractors Manual 31. B Page 250 Builder's Guide to Accounting 32. A Ch. 3 Florida Contractors Manual 33. A Page 253 or 327 Builder's Guide to Accounting 34. B Page 169 Builder's Guide to Accounting 35. B Ch. 9, (4)(a)(b) Florida Contractors Manual 36. A Ch. 3 Florida Contractors Manual 37. C Ch. 10 Florida Contractors Manual 38. B Page 162 Builder's Guide to Accounting 39. D Ch. 2 Florida Contractors Manual 40. C Section AIA Document A C Section AIA Document A C Section AIA Document A C Ch. 5 Florida Contractors Manual Unemployment Compensation Employer HB 44. B Ch. 5 Florida Contractors Manual Unemployment Compensation Employer HB 45. D Ch. 7 Florida Contractors Manual 12

13 46. C Ch. 3 Florida Contractors Manual, Circ. E 47. D Page 121 Builder's Guide to Accounting 48. C Page 142 Builder's Guide to Accounting 49. B Ch. 10 Florida Contractors Manual 50. C Page 308 Builder's Guide to Accounting 13