Nevada Contractor License Exam — All Questions

The Nevada State Contractors Board sets a monetary limit on every license (the most the licensee may undertake in one or more contracts on a single construction site or subdivision site for a single client). When an applicant requests a monetary limit of $1,000,000 or more, what kind of financial statement must be filed?

• a.A statement compiled by an independent CPA within the last six months
• b.A statement on the Board's form with a verifying affidavit only
• c.A financial statement reviewed or audited by an independent CPA✓
• d.A federal income-tax return for the most recent year only

NAC 624.593 ties the kind of financial statement to the monetary limit requested. For $1,000,000 or more, the statement must be reviewed or audited by an independent CPA within one year before filing. Lower limits allow less: a CPA-compiled statement below $1,000,000, and the Board's form with an affidavit at $25,000 or less.NAC 624.593 (financial statement by monetary limit); NRS 624.220(2) (monetary limit)

A Nevada applicant's financial statement shows current assets of $180,000 and current liabilities of $110,000. What working capital will the Board consider?

• a.$110,000
• b.$160,000
• c.$70,000✓
• d.$290,000

Working capital = current assets - current liabilities = $180,000 - $110,000 = $70,000. Working capital measures short-term financial strength and is one factor the Board may weigh in judging a contractor's financial responsibility (NRS 624.263(2)).Construction Business and Law Manual for Nevada (working capital = current assets - current liabilities)

Before a Nevada license is issued, the applicant must file a contractor's license bond or a cash deposit in an amount the Board sets. Within what range does that amount fall?

• a.From $50,000 to $1,000,000
• b.From $1,000 to $500,000✓
• c.A flat $10,000 per license
• d.From $5,000 to $250,000

Under NRS 624.270 the license bond or cash deposit runs from $1,000 up to $500,000. The Board sets the amount according to the contractor's financial and professional responsibility and the size of its operations. The bond gives injured owners, workers, and suppliers a source of recovery if the contractor violates the licensing law.NRS 624.270 (contractor's license bond)

New Nevada contractors licensed for residential work pay into the Residential Recovery Fund in addition to application and biennial fees. What is that fund's purpose?

• a.To pay the contractor's own workers' compensation claims when the contractor's industrial insurance policy has lapsed or been cancelled
• b.To fund apprenticeship training statewide for the building trades through grants administered by the State Contractors Board
• c.To reimburse the State Contractors Board's staff salaries
• d.To compensate certain homeowners who suffer actual damages from an act or omission of a licensed residential contractor✓

The Residential Recovery Fund (NRS 624.470 et seq.) reimburses eligible owners of single-family residences for actual damages caused by a licensed residential contractor's misconduct when they cannot otherwise collect. It protects only owners who used a licensed contractor.NRS 624.470 et seq. (Residential Recovery Fund)