New Mexico CID Business and Law Examination

What passing score does NMAC 14.6.3.8 and the PSI New Mexico Contractor Examinations Candidate Information Bulletin require on the Business and Law Examination?

• A70 percent (35 of 50 points)
• B75 percent (38 of 50 points)
• C80 percent (40 of 50 points)
• D85 percent (43 of 50 points)

Under NMAC 14.6.3.8, a qualifying-party certificate may be issued only to an individual who is at least:

• A16 years of age
• B17 years of age
• C18 years of age
• D21 years of age

Which statement about a New Mexico CID contractor license is correct under NMAC 14.6.3.8 and NMSA 1978 Section 60-13-18?

• AThe license is not transferable and may be used only by the entity to which it is issued
• BThe license may be sold with the business assets if the buyer keeps the same qualifying p…
• CThe license automatically transfers to a surviving spouse on the death of a sole propriet…
• DThe qualifying party may lend the license to a related company for a single project

A licensed New Mexico contractor wants to bid using a trade name that is not the name shown on the CID license. What does NMAC 14.6.3.8 require?

• AThe contractor may use any registered trademark if the license number is also shown
• BThe contractor may use a DBA after filing it only with the county clerk
• CThe contractor may use a shortened version of the licensed name on bids
• DThe contractor may engage in contracting only under the exact name shown on the license

What proof of financial responsibility must a New Mexico contractor furnish at initial licensure and as a condition of each renewal?

• AA cash deposit of USD 5,000 with CID
• BA USD 10,000 surety bond underwritten by a corporate surety authorized to transact busine…
• CA personal guarantee from the qualifying party for USD 25,000
• DA certificate of deposit equal to 10 percent of the prior year's volume

Before an applicant may sit for a New Mexico qualifying examination, NMAC 14.6.3.8 generally requires documented work experience of:

• ATwo years at any time in the applicant's career
• BThree years within the five years immediately prior to application
• CFour years within the 10 years immediately prior to application
• DFive years of consecutive New Mexico employment

How does NMAC 14.6.3.8 credit accredited technical training toward the qualifying-party experience requirement?

• AEach year of equivalent accredited training counts as one-half year of experience, and tr…
• BEach year of accredited training counts as a full year of experience with no cap
• CAccredited training may replace the entire experience requirement if the school is NASCLA…
• DOnly New Mexico apprenticeship hours count, and they count hour-for-hour

Payment from the New Mexico contractor license bond required by NMSA 1978 Section 60-13-49 is used to:

• APay the contractor's unpaid material suppliers on every private project
• BGuarantee the owner's completion costs if the contractor defaults
• CReimburse CID for examination and renewal fees
• DCure CID-certified code violations caused and not corrected by the licensee

A CID inspector issued a final inspection on March 1, and the local building official issued a certificate of occupancy on April 15 of the same year. Under NMAC 14.6.3.8, a claim against the contractor's USD 10,000 license bond must be made within:

• AOne year after the certificate of occupancy
• BTwo years after the final inspection, because that date is earlier
• CTwo years after the certificate of occupancy, because that date is later
• DThree years after either date, whichever the claimant prefers

A qualifying party wants to qualify two separate New Mexico licensed entities that are not a joint venture. What common-ownership rule applies under NMAC 14.6.3.8?

• AThe qualifying party may qualify any number of entities if each pays a separate exam fee
• BThe qualifying party may qualify two entities only if they share the same registered agent
• CThe qualifying party may qualify more than one licensed entity only if there is at least…
• DThe qualifying party may never qualify more than one entity, including a joint venture

If a New Mexico licensee loses its qualifying party through termination or otherwise, who must notify CID and by when?

• ABoth the licensee and the qualifying party must notify CID or its designee in writing wit…
• BOnly the licensee must notify CID, and only at the next renewal
• COnly the qualifying party must notify CID, within 10 days
• DNo notice is required if a replacement qualifying party is already employed

An incomplete New Mexico contractor application is received by CID on January 10. If the remaining requirements are not completed, when does the application expire and what happens to the fees?

• AIt remains open indefinitely until CID denies it
• BIt expires in 90 days, but paid fees are credited to a new application
• CIt expires in one year, matching passing-score validity
• DIt expires in six months, and any fees paid automatically forfeit

A candidate passes the New Mexico Business and Law exam on June 1. According to the PSI bulletin, how long is that passing score valid, and how does it relate to the trade exam?

• AThe score is valid for six months, and the trade exam may be taken at any later time
• BThe score is valid for one year from the examination date, and Business and Law and the t…
• CThe score is valid indefinitely once CID has the file
• DThe score is valid for two years, matching the license renewal cycle

A new qualifying-party certificate is issued after the exam score is reported to CID, but the individual never attaches it to a valid license. When does that new certificate automatically expire?

• A90 days after the score is reported
• BSix months after the application date
• C12 months from the date the exam score was reported to CID or its designee
• DOnly when CID holds a revocation hearing

For the New Mexico Business and Law exam (not an inspector exam), what retest limit does the PSI bulletin impose?

• AA candidate may not take the same examination more than twice within a 30-day period; aft…
• BA candidate may test only twice during the entire six-month eligibility period
• CA candidate may retest the next business day without limit
• DA candidate must wait one year after any failed attempt

What happens to a New Mexico sole proprietor's contractor license on the death of the sole proprietor?

• AThe license automatically transfers to the estate for two years
• BThe license remains valid until the next renewal date
• CThe surviving spouse may use the license for any new bids for 180 days
• DThe license automatically cancels, though work already in progress may continue no more t…

What is the primary purpose of a quantity takeoff when preparing a construction bid?

• ATo set the owner's liquidated-damages rate
• BTo measure the labor, material, and equipment quantities needed so direct costs can be pr…
• CTo replace the need for a site visit or addenda review
• DTo establish the retainage percentage in the prime contract

A public owner requires a bid bond with each proposal. What is the bid bond's primary purpose?

• ATo guarantee payment of all subcontractors after award
• BTo insure the project against fire during construction
• CTo assure the owner that the bidder will enter into the contract and provide required per…
• DTo reimburse CID if the bidder later works without a license

An addendum issued two days before bid opening changes the specified roof membrane. What should a bidder do?

• AAcknowledge the addendum in the bid and price the revised membrane
• BIgnore the addendum because it arrived after the original estimate was finished
• CSubmit two bids, one with and one without the addendum
• DWait to price the change as a change order after award

A takeoff shows 2,400 square feet of gypsum board. The estimator adds a 10 percent waste factor. How many square feet should be purchased?

• A2,160 square feet
• B2,400 square feet
• C2,520 square feet
• D2,640 square feet

A unit-price bid item is 285 square yards of concrete paving at USD 84 per square yard. What is the extended amount for that item?

• AUSD 21,840
• BUSD 23,940
• CUSD 24,840
• DUSD 28,500

Direct costs on a job are USD 50,000. The estimator applies 15 percent overhead to direct cost, then applies 10 percent profit to the subtotal. What is the bid amount?

• AUSD 60,000
• BUSD 62,500
• CUSD 63,250
• DUSD 75,000

A contractor's annual overhead is USD 180,000. Estimated annual direct-cost volume is USD 1,200,000. What overhead amount should be assigned to a job with USD 64,000 of direct cost if overhead is allocated as a uniform percentage of direct cost?

• AUSD 9,600
• BUSD 10,800
• CUSD 12,000
• DUSD 15,000

After opening bids, a general contractor discloses a subcontractor's quoted price to a competitor and asks that competitor to beat it. This practice is commonly called:

• AValue engineering
• BA pre-bid addendum
• CA responsive alternate
• DBid shopping

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

• AResponsive means the bidder is bonded; responsible means the bid is the lowest
• BResponsive means the bid complies with the invitation's material requirements; responsibl…
• CThe two terms are interchangeable under NASCLA practice
• DResponsive refers only to minority-business participation; responsible refers only to saf…

An estimate shows materials USD 22,500, labor USD 16,800, and equipment USD 4,200. The contractor applies a combined 18 percent markup for overhead and profit on those direct costs. What is the bid?

• AUSD 43,500
• BUSD 48,720
• CUSD 51,330
• DUSD 56,550

Which business form generally exposes the owner to unlimited personal liability for business debts?

• AA sole proprietorship
• BA corporation
• CA limited liability company
• DA limited partnership, as to a limited partner who does not participate in control

Which equation must a balance sheet satisfy?

• ARevenue minus expenses equals cash
• BAssets equal liabilities plus owner's equity
• CCurrent assets equal current liabilities
• DGross profit equals net profit plus retainage

Under the accrual method, when does a contractor recognize revenue on a progress-billed contract?

• AOnly when the owner's check clears the bank
• BOnly when retainage is released at the end of the job
• CWhen the revenue is earned, typically as work is performed or billable, even if cash has…
• DOnly in the year the contract is signed

Working capital is best defined as:

• ATotal assets minus total liabilities
• BCash plus the original license bond
• CNet profit from the last completed job
• DCurrent assets minus current liabilities

A contractor reports current assets of USD 198,000 and current liabilities of USD 90,000. What is the current ratio?

• A2.20
• B1.20
• C0.45
• D2.00

A contractor has current assets of USD 315,000 and current liabilities of USD 210,000. What is working capital?

• AUSD 525,000
• BUSD 105,000
• CUSD 315,000
• DUSD 1.50

A USD 400,000 contract holds 10 percent retainage. The first pay application is for 40 percent completion with no previous billings. How much should the contractor expect to receive if the application is approved as submitted?

• AUSD 160,000
• BUSD 144,000 after a 20 percent retainage
• CUSD 144,000 after 10 percent retainage on the USD 160,000 gross billing
• DUSD 40,000

A contractor's year shows contract revenue of USD 625,000 and job costs of USD 437,500. What is the gross-profit percentage?

• A14 percent
• B25 percent
• C43.75 percent
• D30 percent

In double-entry bookkeeping, every transaction is recorded with:

• AAt least one debit and one credit of equal total amount
• BA single entry to the cash account only
• CA memorandum on the job folder instead of the books
• DA credit to revenue whenever cash is spent

What is the main purpose of job-cost accounting for a contractor?

• ATo replace the need for a year-end tax return
• BTo track actual labor, material, equipment, and subcontract cost against the estimate for…
• CTo set the New Mexico gross receipts tax rate
• DTo transfer the CID license between entities

Depreciation of a construction truck is best described as:

• AA cash payment made each month to the dealer
• BAn increase in the truck's market value over time
• CThe systematic allocation of the truck's depreciable cost to expense over its useful life
• DA retainage withholding on equipment rentals

A contractor's fixed annual overhead is USD 96,000. Average contribution margin is 24 percent of revenue. What annual revenue is required to break even?

• AUSD 23,040
• BUSD 96,000
• CUSD 120,000
• DUSD 400,000

A job is bid at USD 185,000. Actual direct costs are USD 142,000 and allocated company overhead is USD 21,300. What is net profit on the job?

• AUSD 21,700
• BUSD 43,000
• CUSD 21,300
• DUSD 64,300

Under NMAC 14.6.3.8, a New Mexico contractor license is issued only to:

• AAny individual who passes the Business and Law exam, even if no business entity exists
• BA qualified business entity that employs or is owned by one or more qualifying parties ce…
• CThe qualifying party personally, who may then lease the license to any company
• DA joint venture even if none of the venturers holds a New Mexico contractor license

A surety reviews two contractors. Contractor A has a current ratio of 0.70. Contractor B has a current ratio of 2.10. What is the most accurate interpretation?

• AContractor A is more liquid because a lower current ratio is always better
• BThe two ratios give no information about short-term obligations
• CContractor B is in a stronger short-term liquidity position because current assets more t…
• DCurrent ratio measures only long-term debt to equity

A contractor is 50 percent complete on a USD 240,000 contract with 10 percent retainage. Stored materials of USD 12,000 are billable this period in addition to the percent-complete amount, and retainage also applies to stored materials. There were no prior billings. What is the net payment due?

• AUSD 120,000
• BUSD 132,000
• CUSD 108,000
• DUSD 118,800