Florida General Contractor Exam — All Questions

Under Florida's two-tier construction licensing scheme, what is the practical difference between a CERTIFIED and a REGISTERED contractor?

• a.A certified contractor may work only in the county that issued his local competency card, while a registered contractor holds statewide scope without further local testing
• b.A certified contractor may work statewide, while a registered contractor may work only within the local jurisdiction(s) whose competency card he holds✓
• c.A certified contractor is limited to residential work up to three stories, while a registered contractor may take commercial work
• d.A registered contractor has passed the state examination, while a certified contractor qualifies on a local competency card

A certified contractor holds a state certificate of competency and may contract anywhere in Florida without further local testing; a registered contractor holds a local competency card and may work only in the jurisdiction(s) that issued it. 'Registered' means locally limited geography, not lesser skill.s. 489.113, F.S.

A primary qualifying agent resigns from a contracting business. How long does the business have to designate a replacement before it may no longer undertake new contracting work?

• a.1 year
• b.6 months
• c.30 days
• d.60 days✓

If the qualifying agent leaves, the business has 60 days to designate a replacement; otherwise it may not undertake new contracting, though it may complete existing contracts. This prevents an unqualified firm from operating without a responsible licensee.s. 489.119, F.S.

A construction company with a $20 million net worth wants to build a shopping center to sell to the public without obtaining its own certificate of authority, citing the large-company exemption. Is this permitted?

• a.Yes, if the company posts a $20,000 surety bond with the Board and employs a certified contractor to pull the permits, since the net-worth test is the only other condition
• b.No, because the exemption is available only to companies with a net worth of at least $50 million that also hold a certificate of authority
• c.Yes, because a net worth of $20 million alone triggers the exemption regardless of who owns the property
• d.No, because the exemption applies only when the company builds on real property it (or an affiliate) owns and still employs a registered/certified contractor to supervise✓

The s. 489.119(7)(a) exemption requires ALL THREE conditions: employing a registered/certified contractor to permit and supervise, contracting only on property the organization or an affiliate owns, and a minimum $20 million net worth. Building for the general public falls outside the own-property limitation and requires a qualifying agent and certificate of authority.s. 489.119(7)(a), F.S.

An applicant for a Florida construction license has a FICO credit score of 640. Under the current financial-responsibility rule, what must the applicant do before the license will issue?

• a.Post an irrevocable letter of credit for $20,000 in favor of DBPR
• b.Wait 12 months and re-apply, because a score under 700 bars licensure for a year
• c.Nothing further; any FICO score of 600 or higher satisfies the rule
• d.Complete a board-approved 14-hour financial-responsibility course✓

An applicant who cannot show a credit (FICO) score of 660 or higher must complete a board-approved 14-hour financial-responsibility course. As amended effective 5/5/2024, this course is the only path; the older bond/letter-of-credit alternative was removed.s. 489.115(5)(b), F.S.; Rule 61G4-15.006, F.A.C.

Which characteristic is the single biggest liability weakness of operating a contracting business as a sole proprietorship?

• a.The owner may not deduct business expenses on a personal return and must file a separate corporate return
• b.The business must pay the flat 21% federal corporate income tax plus Florida's 5.5% tax on the same profits
• c.The business is barred from obtaining a Florida certificate of authority
• d.The owner faces unlimited personal liability, so business debts and judgments can reach personal assets✓

A sole proprietorship is not a separate legal entity, so the owner and business are the same 'person' and the owner bears unlimited personal liability. Business judgments can reach the owner's home, car, and savings.Florida Contractors Manual, Ch. 1 (business structures); s. 489.119, F.S.

What is the principal tax disadvantage of a C-corporation compared with an S-corporation or LLC?

• a.A C-corp is limited to 100 shareholders, so a growing contractor must convert to an LLC to admit more owners
• b.A C-corp cannot deduct owner-employee wages or fringe benefits, so salaries must come out of profits already taxed at 21%
• c.A C-corp's profits are subject to double taxation — taxed at the corporate level, then again as dividends to shareholders✓
• d.A C-corp must pay 15.3% self-employment tax on all profits on top of the corporate rate

A C-corp pays the flat 21% federal corporate income tax (plus Florida's 5.5%) on profits, and shareholders pay again on dividends they receive — the classic double taxation. S-corps and LLCs avoid this because income passes through to owners' personal returns.26 U.S.C. §11; Ch. 220, F.S.

Which statement correctly describes Florida's income tax treatment relevant to a contracting business?

• a.Florida imposes a 5.5% corporate income tax and no personal income tax✓
• b.Florida imposes a 9.5% personal income tax but no corporate income tax
• c.Florida imposes no corporate income tax and no personal income tax
• d.Florida imposes both a personal income tax and a 5.5% corporate tax

Florida has no personal income tax, but it does levy a 5.5% corporate income tax. For Floridians the pass-through advantage is mainly about avoiding the federal corporate double tax and managing self-employment tax, not dodging a state salary tax.Ch. 220, F.S.

How does a surety bond differ from insurance?

• a.A surety bond and insurance are legally identical two-party contracts
• b.A surety bond is a three-party guarantee, and if the surety pays a claim the contractor must reimburse the surety✓
• c.A surety bond covers the contractor's own employees for on-the-job injuries in place of a Ch. 440 policy
• d.A surety bond is a two-party contract between contractor and owner that transfers the contractor's own risk, with the premium held as a loss reserve

A surety bond is a three-party guarantee among the principal (contractor), obligee (owner), and surety (bonding company); the surety guarantees the contractor's performance and, if it pays a claim, the contractor must reimburse it. Insurance is a two-party contract transferring the contractor's own risk with no reimbursement.Florida Contractors Manual, Ch. 1 (bonding vs. insurance)

A contractor takes a $50,000 term loan at 8% annual simple interest and repays it in full after 3 years. How much simple interest accrues over the loan's life?

• a.$8,000
• b.$120,000
• c.$4,000
• d.$12,000✓

Simple interest is I = P × r × t = $50,000 × 0.08 × 3 = $12,000. The rate is the annual rate and time is measured in years.Florida Contractors Manual, Ch. 1 (cost of credit); I = P × r × t

A supplier offers terms of '2/10, net 30.' Approximately what annualized cost does a contractor incur by forgoing the discount and paying on day 30 instead of day 10?

• a.About 73%
• b.About 2%
• c.About 36%✓
• d.About 12%

Passing up the discount means paying 2% extra to keep cash an extra 20 days. Annualized: 2% × (365 ÷ 20) ≈ 36%. That effective rate far exceeds a line of credit, so a contractor with cash should almost always take the discount.Florida Contractors Manual, Ch. 1 (trade credit / cost of forgoing a discount)

Which of the following is a condition precedent to both the initial issuance and every renewal of a Florida construction license?

• a.Proof of membership in a state-approved trade association plus a $5,000 annual dues receipt
• b.Proof of a four-year college degree in construction management, or ten years of field experience certified by a licensed contractor
• c.A minimum of $100,000 in unencumbered working capital verified by a CPA
• d.An affidavit attesting to workers' compensation coverage under Ch. 440, plus public liability and property-damage insurance✓

As a condition of initial issuance and every renewal, an applicant must file an affidavit attesting to workers' compensation (Ch. 440), public liability, and property-damage insurance in board-set amounts. You cannot be licensed — or stay licensed — without this proof of coverage.s. 489.115, F.S.; Ch. 440, F.S.

A contractor whose LLC is named 'Coastline Builders LLC' wants to market a division as 'Coastline Home Pros.' What does Florida law require for that name, and how long is the registration valid?

• a.Register the fictitious name with the clerk of the circuit court in each county where the division advertises; once recorded it never expires or needs renewal
• b.No registration is required, because the LLC's certificate of authority from DBPR already covers any trade name it advertises
• c.Register the fictitious name with DBPR and list it on the CILB license; it is valid for one year
• d.Register the fictitious name with the Division of Corporations under s. 865.09; it is valid through December 31 of the fifth calendar year after registration✓

Operating under a name other than the entity's exact registered name requires a fictitious-name ('DBA') registration under s. 865.09 with the Division of Corporations (Sunbiz), not DBPR. It must be advertised once in a county newspaper and is valid through December 31 of the fifth calendar year, then renewed.s. 865.09, F.S.

A completed job carries $10,000 of total cost, and you want to keep a 20% gross margin. What must the selling price be?

• a.$12,500✓
• b.$12,000
• c.$8,000
• d.$10,200

For a target margin you divide cost by (1 - margin): 10,000 / (1 - 0.20) = 10,000 / 0.80 = $12,500. Multiplying cost by 1.20 gives $12,000, which is only a 16.7% margin, not 20% - the exam's signature trap.

Which pair of definitions correctly distinguishes markup from margin?

• a.Markup = profit / selling price; margin = profit / cost
• b.Markup and margin are the same percentage expressed two ways
• c.Markup = cost / profit; margin = selling price / profit
• d.Markup = profit / cost; margin = profit / selling price✓

Markup divides profit by cost (what you added on top of cost); margin divides profit by selling price (the share of the customer's dollar you keep). Because cost is smaller than price, markup % is always the larger number for the same profit.

A subcontractor has $180,000 of annual overhead on $900,000 of annual direct job cost. Using the percentage-of-cost method, what is the true (total) cost of a job with $30,000 of direct cost, before profit?

• a.$30,000
• b.$48,000
• c.$33,000
• d.$36,000✓

The overhead rate is 180,000 / 900,000 = 20%. The job must carry $30,000 x 20% = $6,000 of overhead, so total cost = 30,000 + 6,000 = $36,000. Direct cost + allocated overhead = total cost, before any profit is added.

How many cubic yards of concrete are in a 30 ft x 40 ft slab poured 4 inches thick (before any waste factor)?

• a.44.4 cy
• b.14.8 cy✓
• c.400 cy
• d.4.9 cy

Convert thickness to feet (4 / 12 = 0.333 ft), then cy = (length x width x thickness) / 27 = (30 x 40 x 0.333) / 27 = 399.6 / 27 = about 14.8 cy. There are 27 cubic feet in a cubic yard.

On a $1,000,000 contract with 10% retainage, the contractor has completed 40% of the schedule of values and received no prior payments. Using AIA G702/G703 logic, what amount is due on this application?

• a.$440,000
• b.$400,000
• c.$40,000
• d.$360,000✓

Amount due = (work completed and stored to date) - retainage - prior payments. Work to date is 40% x $1,000,000 = $400,000; less 10% retainage ($40,000); less $0 prior = $360,000. The withheld $40,000 is released later per the contract.Amount due = value completed/stored - retainage - prior payments; AIA G702/G703 (Ch. 2, Part E)

A supplier offers terms of 2/10, net 30. Approximately what effective annual interest rate does a contractor pay by skipping the discount and paying on day 30 instead of day 10?

• a.24%
• b.37%✓
• c.2%
• d.12%

Effective annual rate = (discount / (100% - discount)) x (365 / (full period - discount period)) = (2/98) x (365/20) = 0.0204 x 18.25 = about 37%. Forgoing the discount is like borrowing at ~37% a year, so a contractor with cash should almost always take it.

A Florida contractor performs a lump-sum real-property improvement. How is Florida sales/use tax handled on the materials?

• a.Real-property improvements are entirely exempt from Florida sales and use tax, so the contractor buys materials on a resale certificate
• b.The owner self-reports use tax at 6% on the finished improvement's fair market value
• c.The contractor is the ultimate consumer and owes tax (6% plus any county surtax) on the contractor's cost of the materials✓
• d.The contractor collects 6% plus surtax from the owner on the full contract price and remits it as a retailer

A lump-sum improvement contractor is treated as the ultimate consumer of the materials, owing sales or use tax on the contractor's material cost (6% state plus any discretionary county surtax) rather than charging the customer tax like a retailer. It is a cost built into the bid.Fla. Stat. 212.06(1); Fla. Admin. Code Rule 12A-1.051 (Ch. 2, Part D)

Which AIA document is the 'rulebook' that defines notice, claims, changes, payment, and dispute-resolution provisions and is referenced by the owner-contractor agreement?

• a.A401 - Standard Form of Agreement Between Contractor and Subcontractor
• b.A201 - General Conditions of the Contract for Construction✓
• c.G703 - Continuation Sheet to the Application and Certificate for Payment
• d.A701 - Instructions to Bidders

A201 (current edition A201-2017) is the general conditions - the rulebook for owner, contractor, and architect covering notice, claims, changes, payments, and disputes. A701 governs bidding, A401 governs the contractor-sub relationship, and G703 is payment-application backup.AIA A201-2017 General Conditions (Ch. 2, Part F, AIA document families)

In the AIA pay-application family, what is the relationship between the G702 and the G703?

• a.The G702 lists the subcontractors on the job; the G703 lists material suppliers and their invoice totals
• b.The G702 is the one-page summary and certificate; the G703 is the itemized continuation sheet whose line totals roll up into the G702✓
• c.Both are one-page summaries of the same information, and the owner chooses which one to require
• d.The G703 is the one-page summary and architect's certificate; the G702 is the line-by-line schedule of values whose totals roll up into it

Remember 'G702 summarizes; G703 itemizes.' The G702 is the one-page Application and Certificate for Payment (contract sum, completed to date, retainage, amount due, with certifications); the G703 continuation sheet details each schedule-of-values line, and its totals roll up into the G702.AIA G702 / G703 (Ch. 2, Part E)

On a $2,000,000 Florida county project, the contract clause calls for 10% retainage on each progress payment. Under Florida's public-construction retainage statute, what is the maximum the public entity may withhold?

• a.10%, because the contract controls
• b.No maximum applies to public projects
• c.2% of each progress payment
• d.5% of each progress payment✓

Florida caps public-construction retainage at 5% of each progress payment for contracts over $200,000; a contract clause exceeding that is unenforceable to the extent of the excess. The statutory cap protects the contractor's cash flow regardless of the contract language.Fla. Stat. 255.078(1) (public construction retainage, 5% cap; applies to contracts over $200,000)

A contractor stops paying an electrical subcontractor midway through a project. Which bond is the sub's remedy, and whom does that bond protect?

• a.The payment bond, which protects subcontractors and suppliers✓
• b.The performance bond, which protects the owner against a contractor default
• c.The bid bond, which protects the owner
• d.The performance bond, which runs to the subcontractor and guarantees payment

The payment bond guarantees the contractor pays its subs and suppliers, so it protects them. A bid bond protects the owner against a low bidder who backs out; a performance bond protects the owner by assuring completion. Each of the three bonds runs to a different party.AIA A312 payment bond; surety-bond protection map (Ch. 2, Part G)

What is the key difference between a mediator and an arbitrator in construction dispute resolution?

• a.Both impose binding decisions; the mediator's award may be appealed to circuit court, while the arbitrator's may not
• b.A mediator facilitates a voluntary settlement and cannot impose a result (non-binding); an arbitrator hears the dispute and renders a decision that is usually binding✓
• c.A mediator issues a binding award enforceable in circuit court; an arbitrator only offers a recommendation the parties may reject
• d.A mediator is a sitting circuit judge appointed by the court and an arbitrator is chosen by the parties; both conduct public trials on the record and both rulings are final

A mediator is a neutral who helps the parties reach their own voluntary settlement and cannot impose an outcome (mediation is non-binding). An arbitrator, by contrast, hears evidence and decides the case, and a binding-arbitration award is enforceable in court and only narrowly appealable.

In critical path method (CPM) scheduling, the critical path through a project network is best defined as the path that has the:

• a.shortest total duration, because it sets the earliest date the project can finish and carries the most float
• b.greatest number of activities, regardless of their durations, because each added activity adds delay risk
• c.longest total duration, which sets the shortest possible completion time and has zero float✓
• d.most float, giving the schedule the most flexibility

The critical path is the longest-duration chain of dependent activities through the network. Because no other path is longer, it fixes the earliest the project can finish, and every activity on it has zero float, so any slip delays the whole project day for day.

A basic bar (Gantt) chart is an excellent scheduling tool for communicating a project to an owner, but its principal weakness is that it does NOT show:

• a.the logical dependencies between activities✓
• b.the scheduled start and finish date of each activity
• c.the calendar timeframe of the whole project
• d.the planned duration of each activity in days

A Gantt chart displays each activity as a bar showing its start, finish, and duration, so it communicates when work happens. What it cannot show is what depends on what — the logical dependencies between activities — which is exactly the gap the CPM network fills.

A project has two chains that both must finish before final inspection. Path 1: demolition (3) → framing (5) → drywall (4) → paint (3). Path 2: demolition (3) → rough plumbing (2) → HVAC (4). How many days of float does the mechanical chain (Path 2) carry?

• a.9 days
• b.3 days
• c.6 days✓
• d.0 days

Path 1 totals 15 days and is critical; Path 2 totals 9 days. Float on the non-critical chain equals the difference between the paths: 15 − 9 = 6 days. The mechanical work can slip up to six days before it would delay the project.

In that same tenant build-out, the critical (finish) chain has zero float and the mechanical chain has 6 days of float. If BOTH the HVAC delivery and the drywall activity each slip 3 days (separately), what is the effect on the 15-day completion date?

• a.Both slips are additive, pushing completion to 21 days
• b.Neither slip changes the completion date, because both are within tolerance
• c.The HVAC slip pushes completion to 18 days; the drywall slip has no effect
• d.The drywall slip pushes completion to 18 days; the HVAC slip has no effect✓

Drywall is on the critical path with zero float, so its 3-day slip pushes completion to 18 days. HVAC sits on a chain with 6 days of float, so a 3-day slip is absorbed and completion does not move. Same delay, opposite result — the classic CPM question.

A Florida contractor is performing new-building construction fieldwork on a jobsite. Which OSHA standard is the primary rulebook governing that work?

• a.Chapter 489, Florida Statutes
• b.29 CFR Part 1926 — Construction standards✓
• c.29 CFR Part 1904 — Recordkeeping standards
• d.29 CFR Part 1910 — General industry standards

Construction, alteration, and repair fieldwork is governed by 29 CFR Part 1926. Part 1910 (general industry) can reach a contractor's shop or yard, and Part 1904 covers recordkeeping, but for construction on the jobsite, 1926 applies. Chapter 489 licenses the contractor; it does not govern jobsite safety.29 CFR Part 1926 (construction); Ch. 03 Part C

At 7:00 a.m. a worker on a Florida jobsite dies in a fall. Under OSHA rules, the employer must report the work-related fatality to OSHA within how long of learning of it?

• a.8 hours✓
• b.24 hours
• c.4 hours
• d.72 hours

A work-related fatality must be reported to OSHA within 8 hours. (An in-patient hospitalization, amputation, or loss of an eye has a 24-hour clock.) Swapping the 8-hour fatality clock for 24 hours is the trap the exam sets.OSHA severe-injury reporting rule (29 CFR 1904.39); Ch. 03 Part C

Of OSHA's three injury-and-illness recordkeeping forms, which one must be POSTED in a conspicuous workplace location from February 1 to April 30?

• a.Form 301 — the Injury and Illness Incident Report
• b.Form 300 — the Log
• c.Form 1904 — the Employer Notice
• d.Form 300A — the Annual Summary✓

Form 300A, the Annual Summary of the year's totals, is the one posted from February 1 to April 30 of the following year — and it must be posted even if there were zero recordable cases. Form 300 is the running log; Form 301 is the single-incident report.29 CFR Part 1904 (Forms 300/300A/301; 300A posting Feb 1–Apr 30); Ch. 03 Part C

Under OSHA's hierarchy of hazard controls, which type of control is the MOST effective, and where does personal protective equipment (PPE) rank?

• a.Engineering controls are most effective; elimination is the last resort
• b.PPE is most effective; elimination is the last resort
• c.Administrative controls are most effective; PPE ranks in the middle
• d.Elimination is most effective; PPE is the last line of defense✓

The hierarchy runs, most to least effective: elimination, substitution, engineering controls, administrative controls, then PPE. Elimination (designing the hazard out) is most effective, and PPE is the last line of defense because it protects only if worn correctly every time.OSHA hierarchy of controls; Ch. 03 Part C

OSHA requires a 'competent person' to inspect certain trenching and scaffolding operations. Which pair of capabilities must that person have?

• a.A Florida professional engineer's license AND at least 10 years of documented field experience in the trade
• b.Completion of the OSHA 30-hour construction course AND annual recertification by the state
• c.The authority to hire and fire the crew AND a current first-aid and CPR card
• d.The ability to identify existing and predictable hazards AND the authority to take prompt corrective action✓

Under 29 CFR 1926.32(f), a competent person is capable of identifying existing and predictable hazards and is authorized to take prompt corrective measures to eliminate them. Both elements are required — a worker who can spot the danger but cannot stop the work is not a competent person.29 CFR 1926.32(f); Ch. 03 Part C (competent person)

Federal OSHA requires a protective system for an excavation at what depth (in soil other than stable rock), and what does the Florida Trench Safety Act add for qualifying public work over that depth?

• a.4 feet; the Act waives the federal standard for public projects under $250,000
• b.10 feet; the Act requires a Florida-licensed engineer to seal and sign every trench plan
• c.5 feet; the Act requires a separate bid line item for the cost of trench-safety measures✓
• d.6 feet; the Act caps reimbursable trench-safety cost at 2% of the bid

OSHA (29 CFR 1926 Subpart P) requires a protective system for excavations 5 feet or deeper (unless in stable rock). The Florida Trench Safety Act adopts the federal standard as the state minimum and requires bidders on public contracts with excavation greater than 5 feet to include a separate line item for trench-safety cost.29 CFR 1926 Subpart P; ss. 553.60–553.64, F.S. (Florida Trench Safety Act); Ch. 03 Part C

A contractor uses a telehandler on remodels roughly 200 days a year and separately needs a specialty 60-foot boom lift for about two weeks on one job. Applying the primary lease-vs-buy factor, the best decision is to:

• a.Buy both machines, since ownership beats rental once a unit runs 30 days per year
• b.Rent both machines to preserve cash and avoid maintenance
• c.Rent the telehandler for the 200 days and buy the 60-foot boom lift
• d.Buy the telehandler (high, steady use) and rent the boom lift (low, one-time use)✓

Utilization is the dominant factor. High, steady use (the telehandler at ~200 days/year) favors purchasing, where per-hour ownership cost plus resale beats daily rental. Low, one-time, specialized use (a two-week boom lift) favors renting, avoiding stranded capital and maintenance/obsolescence risk.

An electrical contractor uses about 50 boxes of a wire connector per week, and the supplier's lead time is 2 weeks. To trigger a reorder before running out, plus a 30-box safety-stock buffer, the reorder point should be set at approximately:

• a.80 boxes
• b.130 boxes✓
• c.200 boxes
• d.50 boxes

Lead-time demand equals usage rate times lead time: 50 boxes/week × 2 weeks = 100 boxes. Adding the 30-box safety stock gives a reorder point of 130 boxes, high enough that the new order arrives before the shelf empties even in a busy week or a slightly late delivery.

A contractor's balance sheet lists total assets of $750,000 and total liabilities of $290,000. Under the accounting equation, what is the owner's equity?

• a.$460,000✓
• b.$290,000
• c.$1,040,000
• d.$750,000

The accounting equation is Assets = Liabilities + Owner's Equity, so Owner's Equity = Assets - Liabilities = $750,000 - $290,000 = $460,000. This identity must always balance and is the foundation of the balance sheet.Florida Contractors Manual, Accounting (accounting equation: Assets = Liabilities + Owner's Equity)

A contractor completes $80,000 of work in December but has not yet been paid or invoiced the customer. On the company's books this $80,000 is recorded as revenue in December. Which accounting method is being used?

• a.Completed-contract method
• b.Percentage-of-completion by billings
• c.Accrual basis✓
• d.Cash basis

Accrual basis records income when it is earned (the work is performed and billable) and expenses when incurred, regardless of when cash changes hands. Cash basis would record nothing until payment is actually received.IRS Pub. 538, Accounting Periods and Methods (cash vs. accrual)

A contractor signs a $600,000 contract with total estimated costs of $450,000. At year-end $180,000 of costs have been incurred. Using the cost-to-cost percentage-of-completion method, how much revenue is recognized to date?

• a.$240,000✓
• b.$180,000
• c.$270,000
• d.$450,000

Percent complete = costs incurred / total estimated costs = $180,000 / $450,000 = 40%. Revenue recognized to date = 40% x $600,000 contract price = $240,000. The completed-contract method would recognize $0 until the job is finished.IRC Sec. 460; IRS Pub. 538 (percentage-of-completion, cost-to-cost)

On a job that is 50% complete with $250,000 of revenue earned to date, the contractor has billed the owner $300,000. How is the $50,000 difference classified on the balance sheet?

• a.A current liability (billings in excess of costs and estimated earnings)✓
• b.A current asset (costs and estimated earnings in excess of billings to date)
• c.Recognized revenue on the income statement for the period just completed
• d.A long-term liability, because the contract will not be completed within twelve months

Billed ($300,000) exceeds earned ($250,000) by $50,000, so the contractor is over-billed. Over-billing is a current liability ('billings in excess of costs and estimated earnings') because the contractor holds the owner's money for work not yet performed.Florida Contractors Manual, construction work-in-process accounts (over-/under-billing)

Which statement about debits and credits in double-entry bookkeeping is correct?

• a.A revenue account increases with a debit and decreases with a credit
• b.An asset account increases with a debit and decreases with a credit✓
• c.A debit always decreases an account balance, whatever the account type
• d.A liability account increases with a debit, not with a credit entry

Direction depends on account type: assets and expenses increase with a debit; liabilities, owner's equity, and revenue increase with a credit. 'Debit' does not universally mean decrease, nor 'credit' increase.Florida Contractors Manual, double-entry bookkeeping (debit/credit rules)

Which of the three core financial statements reports a company's position as a snapshot at a single point in time rather than over a span of time?

• a.The income (profit-and-loss) statement
• b.The trial balance
• c.The balance sheet✓
• d.The cash-flow statement

The balance sheet is a snapshot as of a single date (e.g., 'as of December 31'). The income statement and cash-flow statement both cover a period of time (month, quarter, or year).Florida Contractors Manual, financial statements (balance sheet vs. income and cash-flow statements)

A contractor has current assets of $400,000, which include $100,000 of inventory, and current liabilities of $200,000. What is the quick (acid-test) ratio?

• a.0.5
• b.1.33
• c.2.0
• d.1.5✓

Quick ratio = (current assets - inventory) / current liabilities = ($400,000 - $100,000) / $200,000 = $300,000 / $200,000 = 1.5. The quick ratio excludes inventory, making it a stricter test than the current ratio (which here would be 2.0).Florida Contractors Manual, liquidity ratios (quick/acid-test ratio)

A contractor has fixed costs of $90,000 per year. Each job sells for $3,000 and carries $1,800 of variable cost. How many jobs must the contractor complete per year to break even?

• a.30 jobs
• b.60 jobs
• c.75 jobs✓
• d.50 jobs

Contribution margin per job = price - variable cost = $3,000 - $1,800 = $1,200. Break-even units = fixed costs / contribution margin = $90,000 / $1,200 = 75 jobs. Dividing by the full price or by variable cost alone is the classic trap.Florida Contractors Manual, break-even analysis (units = fixed costs / contribution margin)

A contractor buys equipment for $60,000, expects a $10,000 salvage value, and a 5-year useful life. What is the annual straight-line depreciation?

• a.$14,000
• b.$8,000
• c.$12,000
• d.$10,000✓

Straight-line annual depreciation = (Cost - Salvage) / Useful life = ($60,000 - $10,000) / 5 = $50,000 / 5 = $10,000 per year. Forgetting to subtract salvage value ($60,000 / 5 = $12,000) is the common error.IRS Pub. 946, How to Depreciate Property (straight-line method)

A contractor buys a truck for $30,000 with a 5-year useful life and a $3,000 salvage value, using the double-declining-balance (DDB) method. What is the first-year depreciation?

• a.$6,000
• b.$12,000✓
• c.$10,800
• d.$5,400

The DDB rate = 2 x (1/useful life) = 2 x (1/5) = 40%. It is applied to the beginning book value and ignores salvage in early years: 40% x $30,000 = $12,000. Straight-line ($30,000-$3,000)/5 = $5,400 would be wrong for DDB.IRS Pub. 946 (double-declining-balance method)

A Florida laborer earns $2,000 gross for a pay period, below the Social Security wage base. Separate from what is withheld from the worker, how much FICA (Social Security + Medicare) must the EMPLOYER pay as its own matching share?

• a.$153.00✓
• b.$124.00
• c.$29.00
• d.$306.00

The employer matches the employee's FICA dollar for dollar: 6.2% Social Security + 1.45% Medicare = 7.65%. 7.65% x $2,000 = $153.00. The employee pays another $153.00, for 15.3% combined.IRS Circular E, Pub. 15 (FICA: 6.2% Social Security + 1.45% Medicare, employer match)

The gross FUTA (federal unemployment) rate is 6.0% on the first $7,000 of each employee's annual wages. For an employer that pays its state unemployment tax on time and receives the full credit, what is the effective FUTA rate?

• a.5.4%
• b.1.45%
• c.6.0%
• d.0.6%✓

The full 5.4% state credit reduces the 6.0% gross rate to an effective 0.6% (a maximum of about $42 per employee per year). FUTA is paid entirely by the employer and is never withheld from the employee.IRS Circular E, Pub. 15; Form 940 (FUTA rate and state credit)

In Florida's construction industry, at how many employees does workers' compensation coverage become required?

• a.At six or more employees, full-time or part-time
• b.Only if the payroll exceeds $7,000 a year
• c.As soon as there is one or more employees✓
• d.At four or more employees, counting part-time workers

Construction is the strict industry: coverage is required with even a single employee, unlike the four-employee threshold that applies to most non-construction Florida businesses.Fla. Stat. § 440.02

Under Fla. Stat. § 448.095 (effective July 1, 2023), which private employers must use E-Verify for each new hire?

• a.Employers with 15 or more employees
• b.Employers with 4 or more employees
• c.Employers with 25 or more employees✓
• d.All employers regardless of size

Florida's E-Verify mandate for private employers turns on at 25 or more employees. A small framing crew is not required to use it (though it may voluntarily); a 40-person outfit must.Fla. Stat. § 448.095