Nevada Contractor License Exam — All Questions

In Nevada, a contractor's monetary limit (the largest single contract or project the license permits) is set from the financial statement filed with the State Contractors Board. When an applicant seeks a monetary limit of $1,000,000 or more, what kind of financial statement must be submitted?

• a.A federal income-tax return for the most recent year only
• b.A handwritten net-worth estimate signed by the applicant
• c.A financial statement reviewed or audited by an independent CPA✓
• d.No financial statement is required once the limit exceeds $1,000,000

Nevada ties the monetary limit to the financial statement the applicant files. For a limit of $1,000,000 or more, the Board requires a reviewed or audited statement prepared by an independent CPA, giving stronger assurance of the contractor's capacity to perform larger work.NRS 624.260; NAC 624 (financial statement / 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.$70,000✓
• b.$290,000
• c.$110,000
• d.$160,000

Working capital = current assets - current liabilities = $180,000 - $110,000 = $70,000. Working capital measures short-term financial strength and is one basis the Board uses when setting a contractor's monetary limit.Construction Business & Law Manual for Nevada (working capital = current assets - current liabilities)

Before a Nevada license is issued, the applicant must post a contractor's license bond set by the Board according to the applicant's monetary limit. Within what range does that bond generally fall?

• a.A flat $10,000 for every contractor regardless of size
• b.From $1,000 to $500,000, scaled to the monetary limit✓
• c.From $50,000 to $1,000,000
• d.No bond is required in Nevada

Under NRS 624.270 the license bond runs from $1,000 up to $500,000, set by the Board in proportion to the monetary limit. 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 reimburse the State Contractors Board's staff salaries
• b.To pay the contractor's own workers' compensation claims
• c.To fund apprenticeship training statewide
• 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)