Free C-10 Practice Questions: Estimating, Bidding & Project Management
60 free questions with answers, explanations and the source for each. Answer one to see why. No sign-up.
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1 / 60
A balance sheet shows:
A balance sheet shows assets, liabilities, and owner's equity at a specific date.
Source: Accounting (balance sheet)
2 / 60
To compare its financial data with that of other businesses within the same industry, a contractor can get industry data from organizations such as:
The CSLB law book says the second way to compare financial relationships is against other businesses within the same industry, with industry data provided by organizations such as Dun and Bradstreet and Standard and Poor's.
Source: CSLB Law Book p.59
3 / 60
Which group of expenses does the CSLB law book say overhead normally includes?
The CSLB law book says overhead normally includes such expenses as office rental, supplies and wages, advertising, bad debts, storage charges, and any other general administrative costs.
Source: CSLB Law Book p.64
4 / 60
Retention funds are not available for use elsewhere in the business while they are held. According to the CSLB law book, the contractor must therefore often finance the costs:
The CSLB law book says retention payments may be held up through no fault of the contractor, and since these funds are not available for use elsewhere in the business, the contractor must often finance the costs through borrowing.
Source: CSLB Law Book p.62
5 / 60
The CSLB law book names four typical types of contractual agreements between builder and owner: the lump-sum, the cost-plus, the unit-price, and the:
The CSLB law book says there are typically four types of contractual agreements between builder and owner: the lump-sum, the cost-plus, the unit-price, and the guaranteed-maximum cost contract.
Source: CSLB Law Book p.69
6 / 60
A 'payment bond' guarantees:
CSLB law book, Bonds: payment bonds assure the property owner that no liens for labor and materials will be filed against the property.
Source: Surety bonds (payment bond)
7 / 60
Extra work beyond the contract scope should be authorized by:
BPC 7159: a change-order form for changes or extra work becomes part of the contract only if it is in writing and signed by the parties prior to the commencement of any work covered by the change order.
Source: Contracting practice; CA home-improvement contracts B&P §7159
8 / 60
In the critical path method, a delay in one of the tasks on the key path through the network will:
The CSLB law book says the critical path method takes its name from the key path through the network of tasks, and any delay in one of these tasks will result in an overall delay of the project.
Source: CSLB Law Book p.65
9 / 60
On a balance sheet, the assets are on one side and the liabilities plus stockholders' (owners') equity are on the other. The two sides are:
CSLB law book: the balance sheet has the assets on the left and the company's liabilities and stockholders' equity on the right, and both sides are always equal.
Source: Accounting (fundamental equation)
10 / 60
According to the CSLB law book, a low ratio of net sales to net working capital might be attributed to:
The CSLB law book says a low ratio of net sales to net working capital might be attributed either to an excess of working capital or to inadequate sales.
Source: CSLB Law Book p.61
11 / 60
The CSLB law book says the labor percentage (direct labor as a share of the total cost) is a direct measurement of:
The CSLB law book says the amount and percentage of direct labor should be closely monitored, and the labor percentage is a direct measurement of the efficiency of the workers and the performance of supervision.
Source: CSLB Law Book p.58
12 / 60
The CSLB law book says the typical contract pays 90 percent during the construction phase and the final 10 percent:
The CSLB law book says the typical contract provides for three or more payments, 90 percent during the construction phase and the final 10 percent upon completion and expiration of the lien period; that final 10 percent is the retention.
Source: CSLB Law Book p.61
13 / 60
Which type of bond, as classified in the CSLB law book, guarantees both job completion and payment of all labor and materials?
The CSLB law book says contract bonds guarantee both job completion and payment of all labor and materials. Performance bonds guarantee completion only, and payment bonds assure the owner that no liens for labor and materials will be filed.
Source: CSLB Law Book p.42
14 / 60
A bank loan officer reviewing a contractor's bid asks: Are completion dates realistic? Is there a chance that penalties will be assessed for delays? Under the CSLB law book, these questions evaluate the contractor's:
The CSLB law book lists what the loan officer will evaluate, and Certainty asks whether repayment could be affected by unexpected losses on existing business, whether completion dates are realistic, and whether penalties may be assessed for delays.
Source: CSLB Law Book p.63
15 / 60
Expenses of a general nature that cannot be specifically attributed to individual construction projects are reported on the income statement as:
The CSLB law book says general and administrative expenses are all items of expense of a general nature that cannot be specifically attributed to individual construction projects.
Source: CSLB Law Book p.58
16 / 60
Using selling price = cost + (cost × markup percent ÷ 100), a job costing 1,000 dollars with a 25 percent markup sells for:
1,000 + (1,000 × 25 ÷ 100) = 1,250 dollars.
Source: Estimating arithmetic
17 / 60
In the CSLB law book, net profit for the year (often called net income) represents:
CSLB law book: net profit for the year is often called net income and represents the sum of all revenues minus all expenses.
Source: Accounting (net profit)
18 / 60
Under the cash basis of accounting, revenue is recognized when:
The CSLB law book says that under the cash basis of accounting, revenue is recognized when cash is received, and expenses are deductible in the year paid.
Source: CSLB Law Book p.50
19 / 60
An electrical subcontractor completes its phase early in a long project. According to the CSLB law book, its retentions are released:
The CSLB law book says the total project must be accepted before retentions are released, and the problem is even greater for a subcontractor who completes its phase early and must contend with a long waiting period.
Source: CSLB Law Book p.62
20 / 60
Under Civil Code 9550, a direct contractor awarded a public works contract involving more than $25,000 must, before starting work, give a:
Civil Code 9550(a): a direct contractor awarded a public works contract involving an expenditure in excess of twenty-five thousand dollars ($25,000) shall, before commencement of work, give a payment bond approved by the awarding officer or public entity.
Source: Public works bonding
21 / 60
On a contractor's income statement, which cost is usually the largest single expense item?
The CSLB law book says materials used includes the cost of all materials used on the job and is usually the largest single expense item on the income statement, so purchasing should be carefully controlled.
Source: CSLB Law Book p.58
22 / 60
The CSLB law book warns that differences in the timing of expenditures and receipts may limit a contractor's capacity to finance the business, particularly if the company:
The CSLB law book says differences in the timing of expenditures and receipts may limit a contractor's capacity to finance the business, particularly if the company commits itself to new jobs before final payments on completed jobs have been received.
Source: CSLB Law Book p.62
23 / 60
The third major financial statement, which shows how funds were obtained and where funds were used, is the:
The CSLB law book says the Statement of Changes in Financial Position, also called the Statement of Sources and Applications of Funds, is a third major financial statement that shows how funds were obtained and where funds were used.
Source: CSLB Law Book p.59
24 / 60
The CSLB law book describes fuel and lubricant expenses, general maintenance, and small tools as:
The CSLB law book says fuel and lubricant expenses, general maintenance, and small tools represent indirect costs that may be charged to the project and should not be overlooked.
Source: CSLB Law Book p.64
25 / 60
The CSLB law book says that after all costs, including overhead, have been totaled in a bid, the contractor must add:
CSLB law book, Bidding and Estimation: the contractor must identify overhead, and when all the costs have been totaled, must add profit. Omitting the allowance for profit seriously jeopardizes the business.
Source: Estimating (overhead & profit)
26 / 60
The bar chart is a fundamental scheduling technique that shows the starting and finishing times of each task. Its weakness, according to the CSLB law book, is that it:
The CSLB law book says the bar chart shows graphically the starting and finishing times for the individual tasks, and that this scheduling approach is simple but overlooks some interrelated tasks.
Source: CSLB Law Book p.65
27 / 60
The CSLB law book describes retention withheld from your progress payments as an amount that you have:
The CSLB law book defines retention as a specified amount, usually 10 percent, withheld from progress payments pending satisfactory completion and final acceptance of the project, and says you have already earned this amount even though you have not yet been paid.
Source: CSLB Law Book p.54
28 / 60
'Labor burden' is:
CSLB law book: direct labor burden includes all payroll taxes, insurance, and employee benefits associated with the labor payroll (and union benefit assessments where workers belong to a union).
Source: Labor burden (estimating)
29 / 60
Working capital equals current assets minus:
Working capital equals current assets minus current liabilities.
Source: Accounting (working capital)
30 / 60
The CSLB law book says subcontractors should be chosen based on:
The CSLB law book says subcontractors should be chosen based on their ability to perform, as well as cost, since untimely delays quickly eliminate the potential savings of the lowest bid.
Source: CSLB Law Book p.68
31 / 60
According to the CSLB law book, the Small Business Administration (SBA) helps a contractor obtain financing because it will:
The CSLB law book says the Small Business Administration (SBA) does not make direct loans, but it does guarantee repayment of a loan.
Source: CSLB Law Book p.63
32 / 60
Money supplied by investors who acquire some control of the business and a share of future profits is called:
The CSLB law book says equity funds are supplied by investors who acquire some control of the business and a share of future profits, while debt is borrowed dollars that require repayment of the original amount plus periodic interest.
Source: CSLB Law Book p.62
33 / 60
According to the CSLB law book, insufficient profits in a bid threaten both:
The CSLB law book says insufficient profits threaten both capitalization (losses reduce retained earnings) and cash flow (payments to vendors may exceed receipts), to the extent that bankruptcy or dissolution may result.
Source: CSLB Law Book p.65
34 / 60
Using quick assets = total current assets − inventories, and quick ratio = quick assets ÷ total current liabilities, a contractor with 300,000 dollars of current assets, 120,000 dollars of inventories, and 200,000 dollars of current liabilities has a quick ratio of:
The CSLB law book determines quick assets as total current assets minus inventories: (300,000 − 120,000) ÷ 200,000 = 0.9.
Source: CSLB Law Book p.60
35 / 60
In a home improvement contract, BPC 7159 requires the scope of work to appear under the heading:
BPC 7159 requires the heading "Description of the Project and Description of the Significant Materials to be Used and Equipment to be Installed," followed by a description of the project and of the significant materials and equipment.
Source: Contracting (scope of work)
36 / 60
Under California law, a public-works payment bond must be written in an amount not less than what portion of the total amount payable under the contract?
Civil Code 9554(a): a payment bond shall be in an amount not less than 100 percent of the total amount payable pursuant to the public works contract.
Source: CA Civil Code §9554
37 / 60
The CSLB law book says the cash basis of accounting is not recommended for contractors. The accrual basis it describes instead recognizes revenues:
The CSLB law book says the cash basis of accounting is not recommended for contractors, while the accrual basis recognizes revenues when earned and expenses when incurred, regardless of when payment is received or made.
Source: CSLB Law Book p.51
38 / 60
Once construction begins, the CSLB law book says the estimate that is the basis for the bid becomes:
The CSLB law book says the estimate that is the basis for the bid becomes a budget for the project, and without extensive planning and scheduling, lack of coordination can add costs that reduce profits.
Source: CSLB Law Book p.65
39 / 60
Using current ratio = total current assets ÷ total current liabilities, a contractor with 300,000 dollars in current assets and 200,000 dollars in current liabilities has a current ratio of:
The CSLB law book says to calculate the current ratio, divide total current assets by total current liabilities: 300,000 ÷ 200,000 = 1.5, so there is 1.5 dollars of current assets for each dollar of current liabilities.
Source: CSLB Law Book p.60
40 / 60
On the balance sheet, fixed assets such as construction equipment are valued at:
The CSLB law book says that, regardless of their current market value, fixed assets are valued at their original cost less accumulated depreciation.
Source: CSLB Law Book p.54
41 / 60
Billing is not the same as being paid. Under Civil Code 8800, unless otherwise agreed in writing, the owner must pay the direct contractor an undisputed progress payment within how long after the payment demand is given?
Civil Code 8800(a): except as otherwise agreed in writing, the owner shall pay the direct contractor, within 30 days after notice demanding payment is given, any progress payment due that is not in good faith dispute. Cash therefore trails billing.
Source: Project accounting — billing vs. cash received
42 / 60
A profit-and-loss (income) statement shows:
CSLB law book: the income statement shows business revenue, expenses, and the resulting profit or loss for a given accounting period.
Source: Accounting (income statement)
43 / 60
'Retention' (retainage) is:
Civil Code 8811 and 8812: a retention payment is withheld from a payment (owner from direct contractor, or contractor from subcontractor), and the owner pays the retention within 45 days after completion of the work of improvement.
Source: Retention (retainage)
44 / 60
Notes or mortgages due one year beyond the balance sheet date are classified as:
The CSLB law book defines long-term liabilities as notes or mortgages due one year beyond the balance sheet date, such as a bank loan secured by equipment.
Source: CSLB Law Book p.56
45 / 60
When material prices from published price lists and supplier quotes are entered on the estimate form, the CSLB law book says it is important to include:
The CSLB law book says prices should be obtained from published price lists and quotes from suppliers and subcontractors, and it is important to include sales tax and freight costs.
Source: CSLB Law Book p.64
46 / 60
The balance sheet section that represents the claim of the owners on the assets of the business is the stockholders' equity section, also called:
The CSLB law book says the stockholders' equity section, also called net worth or equity, represents the claim of the owners on the assets of the business.
Source: CSLB Law Book p.56
47 / 60
Using retained earnings = total corporation earnings since its beginning − total dividends declared, a corporation that has earned 300,000 dollars since it was founded and has declared 240,000 dollars in dividends has retained earnings of:
The CSLB law book defines retained earnings as total corporation earnings from its beginning minus the total dividends declared: 300,000 − 240,000 = 60,000 dollars.
Source: CSLB Law Book p.56
48 / 60
On the balance sheet, insurance premiums and office supplies that the company buys and pays for before use are listed as:
The CSLB law book defines prepaid expenses as goods or services the company buys and pays for before use, with insurance premiums and office supplies as examples.
Source: CSLB Law Book p.54
49 / 60
A contractor with a performance bond has abandoned the job. According to the CSLB law book, the bonding company has the option of:
The CSLB law book says that if the job is abandoned or the work is unacceptable, the bonding company has the option of hiring another contractor to complete the work or settling for damages.
Source: CSLB Law Book p.42
50 / 60
Under Civil Code 2787, the party who promises to answer for the debt, default, or miscarriage of another is the:
Civil Code 2787: a surety or guarantor is one who promises to answer for the debt, default, or miscarriage of another. On a contractor bond, that is the bonding company.
Source: Surety bond parties (principal/obligee/surety)
51 / 60
Using working capital = total current assets − total current liabilities, a contractor with 420,000 dollars of current assets and 260,000 dollars of current liabilities has working capital of:
The CSLB law book says the difference between the total current assets and the total current liabilities is called working capital: 420,000 − 260,000 = 160,000 dollars.
Source: CSLB Law Book p.60
52 / 60
On the income statement, permits, bonds, and equipment rentals that are directly chargeable to individual jobs are reported as:
The CSLB law book says other direct costs include all items, other than direct labor, labor burden and materials, that are directly chargeable to individual jobs, such as permits, bonds, insurance, and equipment rentals.
Source: CSLB Law Book p.58
53 / 60
When an estimator calculates labor costs according to work classification for a bid, the CSLB law book says those costs include the hourly wage rate and also:
The CSLB law book says labor costs are calculated according to work classification and include not only the hourly wage rate, but also payroll taxes, health and welfare benefits, vacation pay, and required insurance.
Source: CSLB Law Book p.64
54 / 60
Current assets are cash or assets capable of being converted into cash in the normal course of business, generally within what period from the date of the balance sheet?
The CSLB law book says current assets are cash or assets capable of being converted into cash in the normal course of business, generally within one year from the date of the balance sheet.
Source: CSLB Law Book p.54
55 / 60
In an estimate, 'overhead' refers to:
CSLB law book: overhead normally includes such expenses as office rental, supplies and wages, advertising, bad debts, storage charges, and any other general administrative costs.
Source: Estimating (overhead vs. direct cost)
56 / 60
Money a contractor owes to its suppliers and subcontractors is shown on the balance sheet as:
The CSLB law book lists accounts payable among current liabilities and defines it as money owed to suppliers and subcontractors.
Source: CSLB Law Book p.55
57 / 60
Your electricians belong to a union. According to the CSLB law book, your direct labor burden will then also include:
The CSLB law book says direct labor burden includes all payroll taxes, insurance, and employee benefits associated with the labor payroll, and if the workers belong to a union, it will include union benefit assessments and, in some cases, association fees.
Source: CSLB Law Book p.58
58 / 60
Using the percentage of completion method (profit earned = total estimated profit × percent complete ÷ 100), a job with a total estimated profit of 40,000 dollars that is 50 percent complete at year end has earned profit of:
Under the percentage of completion method, if the work performed is 50 percent of total performance, then 50 percent of the total estimated profit is considered earned: 40,000 × 50 ÷ 100 = 20,000 dollars.
Source: CSLB Law Book p.51
59 / 60
Under the completed contract method, a contractor reports the gross income and related costs for each contract:
The CSLB law book says the completed contract method allows the gross income and related costs for each contract to be reported in the year in which the contract is completed.
Source: CSLB Law Book p.51
60 / 60
A bank loan officer deciding whether to recommend a line of credit (short-term loan) for a contractor would be interested in:
The CSLB law book says the bank loan officer who is to recommend a line of credit (short-term loan) would be interested in the current ratio and quick ratio, because the bank expects the loan to be repaid in the near term.