Where do you actually stand?

Every question in this diagnostic

1. What does the registrar look at to fix the amount of a disciplinary contractor's bond after a license law violation?

   • A A flat sum set by statute No single sum is fixed; the statute gives a $25,000 floor and a ceiling of 10 times the contractor's bond, and the registrar sets the amount between them.
   • B The consumer's loss The consumer's loss does not set the sum; the registrar fixes it by how serious the violation was, between $25,000 and 10 times the contractor's bond.
   • C The licensee's yearly volume Business volume plays no part; the sum turns on how serious the violation was.
   • D How bad the violation was Correct

   The seriousness of the violation sets it: the registrar fixes the sum at no less than $25,000 and no more than 10 times the contractor's bond (Bus. & Prof. Code s. 7071.8(b)). No flat statutory sum applies, and the licensee's volume of work plays no part.

   Bus. & Prof. Code s. 7071.8(b)

2. How many hours a week must a responsible managing employee work to count as actively engaged in the applicant's business?

   • A 20 hours, or 50 percent if less Section 7068(c)(2)(B) sets the figures at 32 hours and 80 percent; 20 hours and 50 percent appear nowhere in the definition.
   • B 32 hours, or 80 percent if less Correct
   • C 32 hours, or 80 percent if more The statute says whichever is less, so reading it as the greater would demand 32 hours from a business open fewer hours.
   • D 40 hours, or 80 percent if less The hours figure in the definition is 32 per week, not 40.

   32 hours a week, or 80 percent of the hours the business operates if that is less (Bus. & Prof. Code s. 7068(c)(2)(B)). The definition says whichever is less, and neither 20 hours nor 40 appears in it.

   Bus. & Prof. Code s. 7068(c)(2)(B)

3. In any one-year period, one qualifying individual may serve as qualifier for at most how many separate firms?

   • A Two Section 7068.1(b) sets the ceiling at three firms, so two understates what the statute allows.
   • B Three Correct
   • C Four Four exceeds the express limit of three firms in any one-year period.
   • D No limit under common ownership The subdivision opens notwithstanding the ownership paragraphs, so meeting the common ownership test does not lift the three-firm ceiling.

   One qualifier may serve at most three firms in any one-year period, even where the firms share ownership (Bus. & Prof. Code s. 7068.1(b)). The ceiling applies notwithstanding the common ownership rules, and four firms is one more than it allows.

   Bus. & Prof. Code s. 7068.1(b)

4. On the cash basis of accounting, revenue is recognized and expenses are deducted:

   • A When money is received and paid Correct
   • B When earned and when incurred That is the accrual basis on the next page, which 'recognizes revenues when earned and expenses when incurred, regardless of when payment is received or made'.
   • C When bills are sent and received Neither basis turns on billing. Under the cash basis the trigger is money received and paid, not the date a bill was sent or arrived.
   • D When the job is completed Reporting a job's income and costs in the year the contract finishes is the completed contract method, a modification of the accrual basis and not the cash basis.

   When money is received and paid, because the cash basis counts revenue when cash comes in and an expense in the year it is paid (CSLB Law Book 2026, p. 50). Counting income when earned and costs when incurred is the accrual basis.

   CSLB Law Book 2026, p. 50

5. On the completed contract method, when is the income from a long-term job started in one tax year and finished the next reported?

   • A As each payment arrives Reporting income as payments arrive is the cash basis, and the completed contract method is a modification of the accrual basis instead.
   • B In the completion year Correct
   • C Across both years, by progress Spreading revenue and profit over the years the work is done is the percentage of completion method, the other of the two modifications named on the same page.
   • D In the year work began The source ties reporting to the year the contract is completed, not to the year it was signed or started.

   The completed contract method reports the income and the costs of a contract only in the year the contract is completed. Spreading them across the years the work is done is the percentage of completion method.

   CSLB Law Book 2026, p. 51

6. What does a balance sheet report about the financial position of a construction business?

   • A Its condition at one point in time Correct
   • B Its profit or loss across a period That is the income statement, which 'summarizes the operations of the company over a period of time' and shows revenue, expenses and the resulting profit or loss.
   • C Its cash receipts during the period A record of cash received across a period is again a period record, while the balance sheet is fixed at one date.
   • D Its estimated costs on current jobs Job cost estimates belong to bidding and estimation. The balance sheet lists assets, liabilities and equity.

   The balance sheet is a statement of the financial condition of a business at a certain point in time, which is why it is often called a snapshot; the statement that summarizes what happened across a period is the income statement.

   CSLB Law Book 2026, p. 51

7. When an employer discharges an employee, the Labor Code makes the earned and unpaid wages due:

   • A At the time of discharge Correct
   • B Within 72 hours of discharge 72 hours is the deadline in section 202 for an employee who quits without notice, and it has no application to a discharge.
   • C On the next regular payday Section 201 does not let a discharge wait for the next payday; the wages are payable at the time of discharge.
   • D Within seven calendar days Seven calendar days is the allowance in section 204(d) for a weekly, biweekly or semimonthly payroll, not a final pay deadline.

   At the time of discharge: wages earned and unpaid when an employee is fired are due and payable immediately (Lab. Code s. 201(a)). Holding the final check for the next regular payday makes the employer late already.

   Lab. Code s. 201(a)

8. How soon must final wages be paid to an employee without a definite-term written contract who quits with no notice?

   • A At the time of quitting Payment at the time of quitting is owed only where the employee gave 72 hours previous notice of the intention to quit.
   • B Within 24 hours of quitting The section states no 24 hour deadline; the only figure it sets for a quit without notice is 72 hours.
   • C Within 72 hours of quitting Correct
   • D On the next regular payday Section 202 does not permit final wages to wait for the next regular payday.

   Within 72 hours: an employee without a written contract for a definite period who quits with no notice must be paid no later than 72 hours after quitting (Lab. Code s. 202(a)). Pay at the moment of quitting is owed only when the employee gave 72 hours' notice first.

   Lab. Code s. 202(a)

9. A contractor willfully withholds a discharged worker's final pay for 45 days. At $240 a day, the waiting time penalty is:

   • A $2,400 $2,400 is 10 days at the daily rate, and the section fixes no 10 day figure; the penalty runs until payment, capped at 30 days.
   • B $7,200 Correct
   • C $10,800 $10,800 is the full 45 day delay, but the wages shall not continue for more than 30 days.
   • D $14,400 $14,400 is 60 days at the daily rate, and the section stops the penalty at 30 days.

   $7,200: a willfully withheld final paycheck runs on as a penalty at the same daily rate, but the law caps it at 30 days, and 30 days at $240 is $7,200 (Lab. Code s. 203(a)). Counting all 45 days of the delay overshoots the cap.

   Lab. Code s. 203(a)

10. A contractor wants to pay its hourly field crews once a month for the prior month's work. How often must it pay them?

    • A Monthly, on a payday set in advance Designating the payday in advance satisfies only part of the section; wages are still due twice during each calendar month.
    • B Twice each calendar month Correct
    • C Monthly, within seven days of month end The seven day allowance in subdivision (d) applies to a weekly, biweekly or semimonthly payroll, and a monthly payroll is none of those.
    • D Every week The section sets a twice monthly floor, so weekly pay is permitted but never required.

    Twice each calendar month: hourly crews must be paid for the 1st to the 15th between the 16th and the 26th, and for the rest of the month by the 10th of the next (Lab. Code s. 204(a)). A single monthly payday, even one set in advance, pays the first half of the month too late.

    Lab. Code s. 204(a)

11. The notice every employer covered by workers' compensation must keep conspicuously posted must show:

    • A The policy declarations page The section calls for a notice whose form and content the administrative director prescribes, not for the insurer's policy documents.
    • B Covered employees and policy numbers Nothing in the section asks for a list of covered employees or a policy number; it asks for the carrier's name or the self-insured status.
    • C A schedule of benefit amounts by injury The prescribed notice describes rights and how to get care, and it does not set out benefit amounts by type of injury.
    • D The carrier's name and who adjusts claims Correct

    The carrier's name and who adjusts claims: the posted notice names the current compensation carrier, or says the employer is self-insured, and says who handles claims (Lab. Code s. 3550(a)). It lists no covered employees and no policy numbers.

    Lab. Code s. 3550(a)

12. After a private work of improvement is completed, the owner may record an effective notice of completion:

    • A Within 10 days 10 days is the owner's deadline under s. 8190(a) for giving copies of the notice, not the window for recording it.
    • B Within 15 days Correct
    • C Within 20 days 20 days is the preliminary notice deadline in s. 8204(a) and has nothing to do with recording a notice of completion.
    • D Within 30 days 30 days is the cessation period in s. 8188(a) that lets an owner record a notice of cessation.

    Within 15 days, because an owner may record a notice of completion only on the completion date or within 15 days after it (Civ. Code s. 8182(a)). Thirty days is not the recording window.

    Civ. Code s. 8182(a)

13. An agreement to improve a home becomes a home improvement contract, with its required contents, once the total contract price is:

    • A More than $500 Correct
    • B More than $750 $750 is the ceiling on a service and repair contract under section 7159.10(a)(1)(A), not the trigger for the home improvement contract rules.
    • C More than $1,000 $1,000 is the dollar ceiling on a home improvement downpayment under section 7159.5(a)(3), a separate rule about how much may be collected up front.
    • D More than $5,000 $5,000 is the value at or below which a home improvement contract may not provide for a security interest in real property under section 7159.2(a).

    More than $500, because an agreement is a home improvement contract only once its total price for labor, services and materials exceeds $500 (Bus. & Prof. Code s. 7159(b)). Neither $750 nor $1,000 is the trigger.

    Bus. & Prof. Code s. 7159(b)

14. On a home improvement job, at what point must the buyer receive a contract copy that both parties have signed and dated?

    • A Within three business days Three business days is the ordinary cancellation window, not a delivery deadline; the copy must be handed over before work starts, whenever that falls.
    • B Before any work starts Correct
    • C Before the first payment Nothing ties delivery of the signed copy to a payment request; the statute fixes the deadline at the start of work.
    • D Within 10 days Ten days is the period for returning a canceling buyer's money, and the statute sets no 10-day window for delivering the contract copy.

    Before any work starts: the contractor must give the buyer a copy of the contract signed and dated by both parties before any work is started (Bus. & Prof. Code s. 7159(c)(3)(A)). Tying delivery to the first payment is not the rule.

    Bus. & Prof. Code s. 7159(c)(3)(A)

15. To become part of a home improvement contract, a written change order for extra work must be signed by both parties:

    • A Before the covered work starts Correct
    • B Within three business days Three business days is a cancellation period, not a signing window; the change order must be signed before any covered work begins.
    • C Before the next progress payment The next progress payment has nothing to do with it; signatures given after the covered work has begun leave the change order outside the contract.
    • D Before final completion Final completion comes after the work is done, and the statute requires the signatures before the covered work begins.

    Both parties must sign the written change order before any of the work it covers starts, and only then does it become part of the contract (Bus. & Prof. Code s. 7159(c)(5)). Signing before the next progress payment is too late once the extra work has begun.

    Bus. & Prof. Code s. 7159(c)(5)

16. A homeowner aged 70 signs a $22,000 remodel contract at her kitchen table and receives the signed, dated copy that day. She may cancel until midnight of:

    • A The third business day Three business days is the ordinary right to cancel, and it is replaced by five business days once the buyer is 65 or older.
    • B The fifth business day Correct
    • C The fifth calendar day The period is counted in business days, so weekends and holidays are excluded and a calendar-day count shortens the buyer's rights.
    • D The seventh business day Seven business days is the disaster right that applies to repair or restoration after a declared emergency, and no emergency was declared here.

    The fifth business day, because for a senior citizen buyer every "three" and "third" in the cancellation notice becomes "five" and "fifth" (Bus. & Prof. Code s. 7159(e)(6)(B)(ii)). Three business days is the ordinary right, and a calendar-day count is not the measure.

    Bus. & Prof. Code s. 7159(e)(6)(B)(ii)

17. Prevailing wages need not be paid on a public works project whose total cost is no more than:

    • A $1,000 Correct
    • B $15,000 $15,000 is the maintenance figure in the registration exemption in s. 1725.5(f) and in the labor compliance program election in s. 1771.5(a); it does not appear in s. 1771.
    • C $25,000 $25,000 is the construction figure in the same registration exemption in s. 1725.5(f), not the prevailing wage threshold.
    • D $30,000 $30,000 is the apprenticeship threshold in s. 1777.5(o), which governs apprentice ratios and not the wage duty.

    $1,000: prevailing wages are owed on every public works project except one of $1,000 or less (Lab. Code s. 1771). A $15,000 or $25,000 project is past that line and owes them.

    Lab. Code s. 1771

18. In what form must every employer keep its Injury and Illness Prevention Program (IIPP)?

    • A In writing Correct
    • B Written or oral The regulation states that the program shall be in writing, so an oral version never meets it.
    • C Oral, with a crew sign-off A crew sign-off does not replace the written program the regulation requires.
    • D Posted at each job site The regulation asks for a written program and sets no job site posting in its place.

    In writing: every employer must have an Injury and Illness Prevention Program, and it must be written (8 CCR s. 3203(a)). An oral program does not meet it.

    8 CCR s. 3203(a)

19. On a construction site, supervisors must hold toolbox or tailgate safety meetings with their crews at least:

    • A Every working day A daily meeting is not required; the interval stated in the subsection is at least every 10 working days.
    • B Once a week Weekly is common industry practice but it is not the regulation's figure, which is stated in working days rather than weeks.
    • C Every 10 working days Correct
    • D Once each calendar month A calendar month runs longer than 10 working days, so a monthly meeting misses the required interval.

    At least every 10 working days, because supervisors must hold toolbox or tailgate meetings with their crews at that interval (8 CCR s. 1509(e)). A monthly meeting falls short of it.

    8 CCR s. 1509(e)

20. Before digging, how much notice must an excavator give the regional notification center for the area?

    • A 30 calendar days Thirty calendar days has no basis in this subsection, which counts in working days and sets 2 as the floor.
    • B Two full weeks Two weeks is far longer than the stated minimum and appears nowhere in the subsection.
    • C 3 working days The subsection states 2 working days, not 3; no three day period appears in section 1541.
    • D 2 working days Correct

    Two working days: the regional notification center must hear of the work at least 2 working days before digging starts (8 CCR s. 1541(b)(2)). Three working days is not the rule's figure.

    8 CCR s. 1541(b)(2)