South Carolina Residential Business Management and Law Exam Prep FREE Sample Exam

Under accrual accounting, when is revenue generally recorded?

When it is earned, even if payment has not yet been received

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Only when cash is deposited in the bank

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Only at the end of the tax year

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When the estimate is first given to the customer

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A contractor receives a deposit for a future job. How should that deposit be treated in the accounts before work is performed?

As fully earned revenue on the day it is received, under accrual accounting

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As a liability, because the business owes the customer work or a refund

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As owner's equity that can never be reversed

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As an expense for materials not yet purchased

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A homeowner verbally asks for extra work, the contract requires written change orders, and the contractor performs the extra work anyway. What risk has the contractor created?

The contractor will automatically receive double payment

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The homeowner will lose the right to occupy the home

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The contractor may be unable to collect for the extra work because the agreed procedure was not followed

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The original contract becomes void in its entirety

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When can an offer generally be revoked by the offeror?

At any time, even years after acceptance

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Before it has been accepted, unless the offeror promised to keep it open under an option or similar commitment

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Only after the contract has been fully performed

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Never, once the offer is spoken or written

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How is an employer’s workers’ compensation premium commonly influenced by its claims history?

Through an experience modification factor that raises or lowers premium based on past losses compared with similar employers

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Premiums are fixed by law and never change

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Only the number of office employees affects the premium

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Claims history affects only the following week's payroll tax

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An employer lets nonexempt employees answer work messages during lunch but records the lunch as unpaid time off. What wage-and-hour problem does this create?

No problem, because lunch time is never compensable

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Time an employee is required or allowed to work is generally compensable, so unpaid recorded lunch periods during which work is performed can violate wage rules

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The employees owe the employer for the training time

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The practice converts the employees into contractors

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Why do lenders on construction loans collect lien waivers before each draw?

To increase the loan amount

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To protect the lender's priority by confirming paid parties have released lien rights for that work

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To satisfy the appraiser

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To avoid recording the mortgage

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A supplier delivered materials that were never incorporated into the project and were returned unused. What is the likely effect on a lien claim for those materials?

The lien amount doubles

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The lien may fail for those materials because they did not improve the property

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The lien automatically attaches to another property

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No effect at all

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What is an insurance premium audit for a contractor most often based on?

Actual payroll and classifications during the policy period, adjusted against estimated premiums

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The number of permits pulled

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The owner's credit score only

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Future bids

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At what height does federal construction fall protection generally become required for work on walking and working surfaces, as a core threshold concept?

At any height above ground level, with no exceptions

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Only above 50 feet

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At 6 feet in general construction work, subject to specific rules for certain tasks

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At 25 feet for all residential work

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What is the licensed home inspector’s role under the Commission, in principle?

To guarantee the future condition of a home

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To build homes and inspect them

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To sell the homes inspected

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To perform visual, non-invasive inspections of residential property and report on observed conditions for a client

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What is the break-even point for a building business?

The revenue level at which total income exactly covers total costs, with no profit or loss

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The point where a job is half finished

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The maximum a bank will lend

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The owner's retirement date

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