Mississippi Law and Business Management Exam

A contractor plans to bid a private commercial warehouse job in Mississippi with a contract price of USD 62,000. Which MSBOC license is required?

• AA commercial license, because the commercial work exceeds USD 50,000
• BNo license, because the job is under USD 100,000
• COnly a residential remodeling license, because the building is a warehouse
• DOnly a local building permit, because MSBOC does not license commercial work

Which pair of MSBOC dollar thresholds is correct for residential work?

• ANew residential construction over USD 10,000 and remodeling or roofing over USD 5,000
• BNew residential construction over USD 50,000 and residential remodeling or roofing over U…
• CNew residential construction over USD 100,000 and remodeling or roofing over USD 50,000
• DNo dollar threshold; every residential job requires a Residential Builder license

What are the MSBOC application fees for a new commercial license, a new residential license, and each additional classification?

• AUSD 50 commercial, USD 400 residential, and USD 25 per additional classification
• BUSD 120 commercial, USD 120 residential, and USD 120 per additional classification
• CUSD 400 commercial, USD 50 residential, and USD 100 per additional classification
• DUSD 300 commercial, USD 100 residential, and USD 50 per additional classification

A commercial applicant wants a major classification. What financial showing must accompany the application?

• AA personal bank letter stating the owner has USD 10,000 in cash
• BA CPA-reviewed financial statement showing at least USD 50,000 net worth
• CA tax return showing at least USD 20,000 of last year's profit
• DA surety bond for USD 300,000 in place of any financial statement

What general liability insurance showing does MSBOC require on a commercial application?

• AAt least USD 300,000 per occurrence and USD 600,000 aggregate, with MSBOC listed for canc…
• BAt least USD 1,000,000 per occurrence, with no Board listing required
• CProof of coverage with no minimum limit, the same rule used for residential applicants
• DA workers' compensation policy may be substituted for general liability

Who may serve as the qualifying party on an MSBOC Certificate of Responsibility, and what is the usual company limit?

• AAny Mississippi resident, with no limit on the number of companies
• BOnly the majority shareholder, and that person may qualify unlimited companies
• COnly a licensed attorney, and that person may qualify two companies
• DAn owner, officer, or responsible managing employee, and one person may qualify at most t…

Which statement about the Mississippi Law and Business Management Examination is correct?

• AIt is required only for commercial major-classification applicants and is closed book
• BIt is required of all commercial and residential applicants, is open book, costs USD 120…
• CIt may be skipped if the applicant already holds a local business license
• DIt is administered by MSBOC staff at the Jackson office and may be taken before the appli…

How long is an MSBOC license valid, and what happens if it is not renewed on time?

• AIt is valid for two years and may be renewed at any time within five years
• BIt is valid until the qualifying party leaves, with no annual renewal
• CIt is valid for one year and may be renewed up to 180 days after expiration; after that a…
• DIt remains active automatically if general liability insurance is kept in force

When does fire-sprinkler work require an MSBOC commercial license?

• AOn public projects over USD 5,000 and private projects over USD 10,000
• BOnly when the sprinkler contract exceeds the ordinary USD 50,000 commercial threshold
• CNever, because fire-sprinkler work is licensed only by the fire marshal
• DOn every sprinkler job, including a USD 500 residential head replacement

A Residential Builder license holder wants to take a small commercial tenant-finish job. Under MSBOC classification rules, when may that holder perform commercial work?

• AWhenever the commercial contract is under USD 50,000, with no size limit
• BWhen the commercial job does not exceed 7,500 square feet
• CNever; a Residential Builder may perform only one- and two-family dwellings
• DOnly if the owner is a homeowner converting a house into an office

Direct cost on a bid is USD 80,000. What selling price produces a 20 percent profit margin on the selling price?

• AUSD 88,000
• BUSD 96,000
• CUSD 100,000
• DUSD 104,000

A slab measures 20 feet by 30 feet and is 6 inches thick. How many cubic yards of concrete should be ordered if the estimator adds 10 percent for waste?

• A11.1 cubic yards
• B12.2 cubic yards
• C13.5 cubic yards
• D15.0 cubic yards

A bid of USD 640,000 requires a bid bond equal to 5 percent of the bid amount. What is the bid-bond penal sum?

• AUSD 32,000
• BUSD 6,400
• CUSD 64,000
• DUSD 320,000

Annual company overhead is USD 180,000 and expected annual direct labor is USD 600,000. What overhead rate should be applied to direct labor?

• A18 percent
• B25 percent
• C33 percent
• D30 percent

A carpenter is paid USD 24.00 per hour. Add employer FICA at 7.65 percent, workers' compensation at 6 percent of wages, and USD 2.50 per hour in benefits. What is the burdened hourly labor cost?

• AUSD 26.50
• BUSD 29.78
• CUSD 32.00
• DUSD 27.34

Which estimating method uses a complete quantity takeoff of materials, labor, and equipment from the drawings and specifications?

• ASquare-foot or conceptual estimate
• BParametric estimate based only on historical cost per bed or per bay
• CDetailed unit-price estimate
• DOrder-of-magnitude estimate prepared before design starts

An addendum is issued three days before bid opening. What must a bidder do?

• AIgnore it unless the owner later issues a change order
• BAcknowledge the addendum in the bid and price the revised work
• CWait until after award and then request extra time
• DSubmit two bids, one with and one without the addendum

On a public bid, what is the difference between a responsive bid and a responsible bidder?

• AResponsive means the bid follows the invitation; responsible means the bidder has the cap…
• BResponsive means the bidder is bonded; responsible means the bid is the lowest number
• CThe two terms mean the same thing
• DResponsive refers only to minority-ownership status

After opening bids, a prime contractor discloses a subcontractor's price to a competitor and asks that competitor to beat it. What practice is this?

• AValue engineering
• BA post-bid addendum
• CA legitimate allowance adjustment
• DBid shopping

A specification includes a USD 8,000 allowance for finish hardware. How should the estimator treat that amount?

• AIgnore it, because allowances are paid only if the owner later approves them
• BTreat it as hidden profit that need not appear in the bid total
• CInclude the full USD 8,000 in the bid and adjust later by change order if actual cost dif…
• DDouble it to create a contingency on top of the allowance

A scissor lift can be rented for USD 2,800 per month. Annual ownership cost if purchased (depreciation, insurance, storage, and interest) is USD 14,400. The lift will be needed for 3 months this year and will sit idle the rest of the year. Which option is cheaper for this year, and by how much?

• ABuying is cheaper by USD 6,000
• BRenting is cheaper by USD 6,000
• CThe two options cost the same
• DBuying is cheaper by USD 14,400

How many studs are required for a 40-foot-long single wall framed at 16 inches on center, including a stud at each end and no openings?

• A30 studs
• B31 studs
• C32 studs
• D40 studs

Direct job cost is USD 85,000. The estimator adds 12 percent overhead to direct cost, then adds 8 percent profit to that subtotal. What is the bid price?

• AUSD 102,000
• BUSD 102,816
• CUSD 95,200
• DUSD 91,800

A unit-price bid item is 2,400 square yards of paving at USD 18.50 per square yard. What is the extended amount?

• AUSD 44,400
• BUSD 4,440
• CUSD 43,200
• DUSD 46,800

A Mississippi contractor last furnished labor on a private project on June 1. Within what period must a Claim of Lien generally be filed, and where is it filed?

• AWithin 30 days, in the circuit clerk's office of any county
• BWithin 90 days after last furnishing labor or materials, in the chancery clerk's office o…
• CWithin one year, only with MSBOC
• DThere is no filing deadline if the contractor had a written contract

After a Mississippi Claim of Lien is recorded, which pair of follow-up duties is correct?

• ASue within 30 days and post a copy on the jobsite fence
• BSue within one year and hand-deliver a copy only if the owner asks
• CCommence a payment action within 180 days of filing, and send a copy of the claim to the…
• DNo further action is required; recording alone collects the debt

What is the fundamental accounting equation shown on a balance sheet?

• ARevenue minus expenses equals cash
• BAssets equal liabilities plus owner's equity
• CIncome equals assets minus expenses
• DDebits must exceed credits

A contractor has current assets of USD 125,000 and current liabilities of USD 70,000. What is working capital?

• AUSD 55,000
• BUSD 125,000
• CUSD 195,000
• DUSD 70,000

Current assets are USD 96,000 and current liabilities are USD 48,000. What is the current ratio?

• A0.50
• B1.50
• C2.00
• D3.00

Which accounting method records revenue when it is earned and expenses when they are incurred, even if cash has not yet moved?

• ACash basis
• BAccrual basis
• CSingle-entry memorandum basis
• DCompleted-contract cash method only

A lump-sum contract is USD 500,000. Costs to date are USD 160,000 and estimated total cost is USD 400,000. Under percentage-of-completion, what revenue and gross profit should be recognized to date?

• ARevenue USD 160,000 and gross profit USD 0
• BRevenue USD 500,000 and gross profit USD 100,000
• CRevenue USD 400,000 and gross profit USD 240,000
• DRevenue USD 200,000 and gross profit USD 40,000

A progress billing is USD 80,000 and the contract withholds 10 percent retainage. How much cash should the contractor expect from this application, ignoring stored materials and prior billings?

• AUSD 80,000
• BUSD 72,000
• CUSD 8,000
• DUSD 88,000

Which financial statement reports revenues and expenses over a period of time?

• AIncome statement
• BBalance sheet
• CStatement of cash flows only for one day
• DSchedule of values

Annual fixed overhead is USD 120,000 and the average contribution margin is 25 percent of sales. What annual sales volume is needed to break even?

• AUSD 120,000
• BUSD 150,000
• CUSD 480,000
• DUSD 30,000

Company overhead of USD 90,000 is to be recovered over 6,000 direct-labor hours. What overhead rate per direct-labor hour should the estimator use?

• AUSD 6.67
• BUSD 15.00
• CUSD 90.00
• DUSD 12.00

Which cost is a general and administrative expense rather than a direct job cost?

• ALumber delivered to Project A
• BA backhoe rented only for Project A
• CProject A's temporary toilet
• DThe company bookkeeper's salary at the home office

An employee earns USD 1,200 in a pay period. What is the employee's FICA withholding at the combined 7.65 percent Social Security and Medicare rate, ignoring any wage-base cap?

• AUSD 91.80
• BUSD 183.60
• CUSD 76.50
• DUSD 12.00

Which IRS form does an employer use each quarter to report federal income-tax withholding and FICA taxes?

• AForm 1040
• BForm 941
• CForm W-2
• DForm 1099-NEC

When must a contractor generally make federal estimated income-tax payments?

• AOnly with the annual return on April 15
• BMonthly, on the same dates as Form 941 deposits
• CQuarterly, if the contractor expects to owe at least USD 1,000 in federal income tax
• DOnly after the IRS mails a deficiency notice

What tax identification does MSBOC require on a commercial license application?

• AA Mississippi sales tax number or use tax number
• BOnly a driver's license number
• CA city privilege-license number and nothing else
• DNo tax number is required if the applicant is a sole proprietor

Federal unemployment tax (FUTA) is generally paid by the employer on which wage base?

• AAll wages with no ceiling
• BThe first USD 50,000 of each employee's wages
• COnly overtime wages
• DThe first USD 7,000 of each employee's wages