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FL Plumber practice questions

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Question 1Business and Financial Management

A plumbing contractor who wants to perform work in several Florida counties without obtaining a separate certificate in each one should hold which license?

  1. Local business tax receipt
  2. Certified license Correct answer.
  3. Journeyman certificate
  4. Registered license

Explanation

A certified contractor license is issued at the state level and is valid throughout Florida. A registered license is issued by a local jurisdiction and is limited to that jurisdiction's boundaries. A business tax receipt or a journeyman certificate does not authorize a business to contract for plumbing work.

Question 2Business and Financial Management

Which business structure gives its owners limited personal liability while taxing business profits only once, on the owners' individual returns?

  1. S corporation Correct answer.
  2. General partnership
  3. Sole proprietorship
  4. C corporation

Explanation

An S corporation combines limited liability for its shareholders with pass-through taxation, so profits are reported on the owners' personal returns. A C corporation pays tax at the entity level and is taxed again when dividends are distributed. Sole proprietorships and general partnerships avoid double taxation but leave their owners personally liable.

Question 3Business and Financial Management

A plumbing subcontractor on a project must serve a Notice to Owner within how many days after first furnishing labor or materials?

  1. 60 days
  2. 45 days Correct answer.
  3. 20 days
  4. 90 days

Explanation

Florida lien law requires a subcontractor or material supplier who is not in privity with the owner to serve a Notice to Owner within 45 days of first furnishing labor, services, or materials on the project. Missing that deadline generally forfeits the right to record a lien.

Question 4Business and Financial Management

In Florida, a construction employer must carry workers' compensation coverage once it employs how many workers?

  1. Ten or more
  2. Four or more
  3. One or more Correct answer.
  4. Three or more

Explanation

Florida applies a lower threshold to the construction industry than to other industries. Construction employers, including corporate officers, must provide workers' compensation coverage with even one employee. Non-construction employers generally are not required to cover until they have four employees.

Question 5Business and Financial Management

A contract that sets one total price for a defined scope of work, regardless of the contractor's actual costs, is called a:

  1. Time-and-materials contract
  2. Unit-price contract
  3. Lump-sum contract Correct answer.
  4. Cost-plus contract

Explanation

A lump-sum, or fixed-price, contract obligates the contractor to complete a defined scope for a single stated price, so cost overruns fall on the contractor. Cost-plus and time-and-materials contracts instead pay the contractor based on actual costs incurred, with a fee added.

Question 6Business and Financial Management

Which payroll cost is shared equally by the employer and the employee?

  1. General liability premium
  2. Workers' compensation premium
  3. FICA Correct answer.
  4. FUTA

Explanation

FICA taxes for Social Security and Medicare are split evenly, with the employer matching the amount withheld from the employee's pay. FUTA is paid only by the employer, and insurance premiums are a business expense that is not deducted from employee wages.

Question 7Business and Financial Management

Which financial statement reports a company's assets, liabilities, and equity as of a specific date?

  1. Statement of cash flows
  2. Statement of retained earnings
  3. Balance sheet Correct answer.
  4. Income statement

Explanation

The balance sheet is a snapshot at a point in time showing what the business owns, what it owes, and the owners' equity. The income statement reports revenues and expenses over a period, and the cash flow statement tracks cash movements over a period.

Question 8Business and Financial Management

In a plumbing estimate, the markup added to job costs is intended primarily to cover which of the following?

  1. Overhead expenses and profit Correct answer.
  2. Permit and inspection fees only
  3. The cost of materials only
  4. Direct labor wages only

Explanation

Direct costs such as materials, labor, and permits are already included in the job cost before markup is applied. Markup is added on top of those costs to recover business overhead and to generate profit.

Question 9Business and Financial Management

A job's direct costs total $8,000 and the contractor applies a 25 percent markup. What is the selling price?

  1. $12,000
  2. $9,600
  3. $10,000 Correct answer.
  4. $10,400

Explanation

Markup is calculated on cost, so the selling price equals cost multiplied by 1.25. Here $8,000 times 1.25 equals $10,000, which includes $2,000 of markup.

Question 10Business and Financial Management

To earn a 20 percent gross margin on a job with $12,000 in costs, what should the selling price be?

  1. $15,000 Correct answer.
  2. $16,000
  3. $14,400
  4. $15,600

Explanation

Gross margin is a percentage of the selling price, not of cost. Dividing cost by one minus the margin ($12,000 divided by 0.80) gives $15,000, and the $3,000 gross profit is exactly 20 percent of that price.

Question 11Business and Financial Management

A plumbing subcontractor completes $200,000 of work under a contract that withholds 10 percent retainage. How much money is held back?

  1. $15,000
  2. $10,000
  3. $20,000 Correct answer.
  4. $2,000

Explanation

Retainage is a percentage of each progress payment held by the owner or general contractor until final acceptance. Ten percent of $200,000 is $20,000, which the subcontractor cannot collect until the retainage is released.

Question 12Business and Financial Management

Before recording a construction lien, a contractor must serve the owner with which document at least five days in advance?

  1. Satisfaction of lien
  2. Final payment affidavit Correct answer.
  3. Notice to owner
  4. Notice of commencement

Explanation

Florida law requires a contractor to serve a final payment affidavit on the owner at least five days before recording a Claim of Lien. The affidavit states the amount still owed and confirms that the contractor has paid its own subs and suppliers.

Question 13Business and Financial Management

A subcontractor can identify the property owner, the lender, and the payment bond surety for a project by obtaining which document from the job site?

  1. Claim of lien
  2. Satisfaction of lien
  3. Notice of commencement Correct answer.
  4. Notice to owner

Explanation

The notice of commencement is recorded and posted by the owner and must identify the owner, the contractor, the lender, the surety, and the property description. Subcontractors use it to confirm who must receive notices and where lien or bond claims must be directed.

Question 14Business and Financial Management

Under Florida's prompt payment laws, a contractor who is not paid on time for undisputed work is generally entitled to which remedy?

  1. Double the contract price
  2. Compensatory damages only
  3. Statutory interest Correct answer.
  4. Punitive damages

Explanation

Florida's prompt payment statutes entitle a party who is not paid the undisputed amount within the required time to interest at the statutory rate on the overdue amount. The remedy is designed to compensate for the delay in payment rather than to punish the payer.

Question 15Business and Financial Management

Which document formally authorizes a change in the scope of work and adjusts the contract price or schedule accordingly?

  1. Punch list
  2. Submittal
  3. Change order Correct answer.
  4. Request for information

Explanation

A change order is a written, signed modification to the contract that documents the added or deleted work and its effect on price or time. Without a signed change order, a contractor may have difficulty being paid for extra work.

Question 16Business and Financial Management

A plumbing company has fixed monthly overhead of $30,000 and averages a $1,500 contribution per service call. How many service calls per month are needed to break even?

  1. 25
  2. 18
  3. 15
  4. 20 Correct answer.

Explanation

Break-even volume equals fixed costs divided by the contribution earned per unit. Dividing $30,000 by $1,500 gives 20 calls per month, the point at which revenue exactly covers fixed overhead.

Question 17Business and Financial Management

Which insurance policy primarily protects a plumbing business against third-party claims for bodily injury and property damage arising from its operations?

  1. Builder's risk
  2. Workers' compensation
  3. General liability Correct answer.
  4. Commercial auto

Explanation

Commercial general liability coverage responds to claims by customers or others for injury or property damage caused by the contractor's business operations. Workers' compensation covers employee injuries, and builder's risk insures the structure under construction.

Question 18Business and Financial Management

On a large construction project, what does a performance bond provide to the owner?

  1. It warrants the plumbing fixtures for one year
  2. It insures the building during construction
  3. It protects the contractor from owner default
  4. It guarantees completion of the contract work Correct answer.

Explanation

A performance bond is a surety guarantee that the contractor will complete the work according to the contract; if the contractor defaults, the surety must see the job finished or pay the cost. It is separate from insurance that protects the structure or from a warranty on installed fixtures.

Question 19Business and Financial Management

Which fact would most strongly indicate that a worker should be treated as an employee rather than an independent contractor?

  1. The worker bills the company per completed job
  2. The worker supplies specialty tools and equipment
  3. The worker sets his or her own working hours
  4. The company directs how and when the work is done Correct answer.

Explanation

The degree of control exercised by the company is the key factor in worker classification. Close control over how, when, and where the work is performed points to employee status, while independent contractors generally control their own methods, hours, and tools.

Question 20Business and Financial Management

Which record should a plumbing contractor review to identify customers whose invoices are past due?

  1. Aging of receivables Correct answer.
  2. Accounts payable ledger
  3. Depreciation schedule
  4. Petty cash journal

Explanation

An aging of receivables sorts unpaid customer invoices by how long they have been outstanding, allowing the contractor to follow up on slow-paying accounts. The accounts payable ledger tracks money the business owes to others rather than money owed to it.

Question 21Business and Financial Management

A contractor adds 20 percent to the cost of every job to set the price. What gross margin percentage does this produce?

  1. 20 percent
  2. 12 percent
  3. 16.7 percent Correct answer.
  4. 25 percent

Explanation

Margin is gross profit divided by the selling price, while markup is gross profit divided by cost. Adding 20 percent to cost gives a selling price of 1.20 times cost, so the margin is 0.20 divided by 1.20, or about 16.7 percent.

Question 22Business and Financial Management

A company has annual fixed costs of $180,000. Each job averages $6,000 in revenue and $3,600 in variable costs. How many jobs per year are required to break even?

  1. 50
  2. 75 Correct answer.
  3. 90
  4. 60

Explanation

Each job contributes $2,400 toward fixed costs, the difference between $6,000 in revenue and $3,600 in variable cost. Dividing fixed costs of $180,000 by $2,400 gives 75 jobs per year as the break-even volume.

Question 23Business and Financial Management

Which statement correctly describes lien rights on a Florida public construction project?

  1. A claim may be made against the payment bond Correct answer.
  2. A lien is recorded with the clerk of the circuit court
  3. A lien may be recorded against the public building
  4. The subcontractor may sue the owner personally

Explanation

Mechanics' liens cannot attach to publicly owned property, so unpaid subcontractors and suppliers instead look to the payment bond required on public projects. A bond claim must be pursued within the statutory time limits and after giving the required notices.

Question 24Business and Financial Management

A subcontractor last furnished labor and materials on June 1. By what date must a Claim of Lien be recorded?

  1. September 29
  2. July 31
  3. October 15
  4. August 30 Correct answer.

Explanation

Florida requires a Claim of Lien to be recorded within 90 days after the claimant's final furnishing of labor, services, or materials. Counting 90 days from June 1 brings the deadline to August 30, so recording on or before that date preserves the lien.

Question 25Business and Financial Management

A company has annual overhead of $150,000. Employees are paid for 3,000 hours per year, and 25 percent of those hours are non-billable. What is the overhead cost per billable hour?

  1. $75.00
  2. $66.67 Correct answer.
  3. $60.00
  4. $50.00

Explanation

Only the billable hours can carry the overhead, so the base is 3,000 hours times 0.75, or 2,250 billable hours. Dividing $150,000 by 2,250 gives about $66.67 per billable hour, which must be recovered in the hourly rate.

Question 26Business and Financial Management

Which of the following is a fixed cost for a plumbing contracting business?

  1. Fuel for service vans driven to job sites
  2. Copper fittings installed on a service call
  3. Monthly rent on the shop building Correct answer.
  4. Hourly wages for drain-cleaning technicians

Explanation

Fixed costs stay roughly constant regardless of how much work the company performs, because they are tied to being open for business rather than to job volume. Shop rent must be paid even in a month with no service calls, so it is a fixed cost. Materials, fuel, and production labor all rise and fall with the amount of work sold.

Question 27Business and Financial Management

Which business structure gives its owners limited personal liability while taxing profits only once, on the owners' personal returns?

  1. General partnership
  2. Limited liability company Correct answer.
  3. Sole proprietorship
  4. C corporation

Explanation

A limited liability company separates the owners from business debts and judgments while generally passing profits through to the owners' personal returns, avoiding a second layer of tax. Sole proprietorships and general partnerships also avoid double taxation but leave owners personally exposed. A C corporation provides limited liability but is taxed at the entity level and again when profits are distributed.

Question 28Business and Financial Management

What is the primary purpose of a purchase order issued by a plumbing contractor to a supplier?

  1. To request a price quote from a supplier
  2. To transfer title of materials to the property owner
  3. To certify that work is complete for payment
  4. To authorize delivery at an agreed price Correct answer.

Explanation

A purchase order is the buyer's written offer and authorization committing the supplier to furnish specific goods at a stated price and delivery point. It creates a record that supports job costing and later invoice matching. Quotes are solicited before the order, title transfers are governed by the sale contract, and completion is certified by a different document.

Question 29Business and Financial Management

On a commercial project billed by monthly progress payments, the amount due for each billing period is derived from which document?

  1. Claim of lien
  2. Schedule of values Correct answer.
  3. Notice of commencement
  4. Change order

Explanation

The schedule of values allocates the contract sum among the various portions of the work and serves as the basis for each progress payment request. The contractor reports the percentage completed against each line item, and the owner pays that portion less retainage. The other documents serve unrelated purposes in the contract and lien process.

Question 30Business and Financial Management

A plumbing company reports current assets of $90,000 and current liabilities of $60,000. What is its current ratio?

  1. 1.50 Correct answer.
  2. 2.50
  3. 1.00
  4. 0.67

Explanation

The current ratio divides current assets by current liabilities: $90,000 divided by $60,000 equals 1.50. It measures the dollars of near-term resources available for each dollar of obligations due within a year. A result of 1.50 indicates the company holds one and a half dollars of current assets per dollar of current debt.

Question 31Business and Financial Management

A plumber is paid a base wage of $28.00 per hour, and the company's payroll taxes, insurance, and benefits add 30 percent to that wage. What is the fully burdened hourly cost of this employee?

  1. $28.00
  2. $36.40 Correct answer.
  3. $44.00
  4. $8.40

Explanation

Labor burden is added to the base wage to arrive at the true hourly cost: $28.00 multiplied by 1.30 equals $36.40. Estimates that use only the base wage understate job cost and erode the margin needed to cover taxes, insurance, and benefits. The burdened rate, not the wage rate, belongs in the job cost buildup.

Question 32Business and Financial Management

A service truck costs $48,000, has an estimated salvage value of $6,000, and has a useful life of six years. Using straight-line depreciation, what is the annual depreciation expense?

  1. $9,000
  2. $8,000
  3. $6,000
  4. $7,000 Correct answer.

Explanation

Straight-line depreciation spreads the depreciable base evenly over the asset's life. The depreciable base is $48,000 minus the $6,000 salvage value, or $42,000, divided by six years, which equals $7,000 per year. Salvage value is excluded because it is expected to be recovered at the end of the asset's life.

Question 33Business and Financial Management

A contractor budgeted $40,000 for materials on a project but the actual material cost came in at $46,000. By what percentage did material cost exceed the budget?

  1. 115 percent
  2. 6.0 percent
  3. 15.0 percent Correct answer.
  4. 13.0 percent

Explanation

Budget variance as a percentage equals the dollar overrun divided by the budgeted amount: $6,000 divided by $40,000 equals 0.15, or 15 percent over budget. Comparing actual results to the budget in percentage terms lets a manager judge the seriousness of the overrun. Dividing by actual cost instead of the budget gives a misleading figure.

Question 34Business and Financial Management

A plumbing company has fixed monthly costs of $75,000, charges $250 per service call, and incurs $150 of variable cost per call. How many calls per month are needed to cover fixed costs and earn a $25,000 monthly profit?

  1. 1,250
  2. 1,000 Correct answer.
  3. 300
  4. 750

Explanation

Each call contributes $250 minus $150, or $100, toward fixed costs and profit. Fixed costs of $75,000 plus the $25,000 profit target total $100,000, which divided by the $100 contribution per call gives 1,000 calls. Adding the profit target to fixed costs is required because both must be covered by contribution.

Question 35Business and Financial Management

A supplier invoices a plumbing contractor $8,000 with terms of 2/10, net 30. The contractor pays the invoice on the ninth day. How much should be remitted?

  1. $8,000.00
  2. $7,840.00 Correct answer.
  3. $7,600.00
  4. $8,160.00

Explanation

The notation 2/10, net 30 means a 2 percent discount is allowed if the invoice is paid within 10 days, with the full amount otherwise due at 30 days. Paying on day nine qualifies, so the contractor deducts 2 percent of $8,000, or $160, and remits $7,840. The discount is calculated on the invoice amount, not added to it.

Question 36Business and Financial Management

A plumbing contractor signs a lump-sum contract to install fixtures in an office building and purchases the materials for the job. How is Florida sales tax handled on those materials?

  1. The contractor pays sales tax to the supplier at purchase Correct answer.
  2. The owner pays the tax directly to the state on the materials
  3. The contractor bills the tax as a separate line item
  4. No tax is due because the materials become real property

Explanation

Under Florida law a contractor improving real property is the final consumer of the materials it installs, so it owes sales tax to the supplier at the time of purchase and the tax becomes part of the job cost. The contractor then recovers that cost through the contract price. The improvement contract itself is not a retail sale of tangible personal property, which is why the tax is not itemized to the customer.

Question 37Business and Financial Management

Which contract type places the greatest risk of cost overruns on the plumbing contractor?

  1. Time and materials
  2. Cost plus a percentage of cost
  3. Lump sum Correct answer.
  4. Cost plus a fixed fee

Explanation

In a lump-sum contract the contractor agrees to perform a defined scope for a fixed price, so any cost above the estimate comes out of the contractor's margin. Cost-reimbursable arrangements shift overrun exposure back to the owner because the owner pays actual costs. Contractors therefore build larger contingencies into fixed-price bids.

Question 38Business and Financial Management

A plumbing contractor reports a net profit for the year but is unable to meet its payroll in February. Which explanation best fits this situation?

  1. Depreciation reduced reported profit
  2. Payroll taxes were remitted on time
  3. Materials were purchased on credit
  4. Profits are locked up in receivables Correct answer.

Explanation

Profit is an accounting measure of revenue earned minus expenses incurred, while cash is what is actually available to spend. When customers and retainage hold payment for weeks or months, a profitable contractor can still run short of cash. This timing gap is why cash flow projections are prepared separately from the income statement.

Question 39Business and Financial Management

A contractor carries $180,000 of annual overhead, expects a 30 percent gross margin on sales, and wants an 8 percent net profit on sales. What annual sales volume is required?

  1. $818,182 Correct answer.
  2. $600,000
  3. $900,000
  4. $2,250,000

Explanation

Gross margin must absorb overhead and still leave the target profit, so the overhead share of sales is 30 percent minus 8 percent, or 22 percent. Dividing the $180,000 of overhead by 0.22 gives the required sales volume of about $818,182. At that volume, gross margin of roughly $245,455 covers overhead and yields 8 percent profit.

Question 40Business and Financial Management

A contractor's income statement shows revenue of $600,000, direct job costs of $468,000, and overhead of $120,000. Which conclusion is best supported by these figures?

  1. Gross margin is 2 percent of revenue
  2. Overhead exceeds the gross profit earned
  3. The company is operating at a net loss
  4. A 10 percent cut in overhead would double net profit Correct answer.

Explanation

Gross profit is $600,000 minus $468,000, or $132,000, and net profit is $132,000 minus $120,000, or $12,000. Cutting overhead by 10 percent saves $12,000, which raises net profit to $24,000, exactly double. This shows how thin net margins magnify the effect of overhead control.

Question 41Contract Administration and Project Management

Which project delivery contract places the greatest risk of cost overruns on the plumbing contractor?

  1. A time-and-materials contract
  2. A cost-plus-fee contract
  3. A lump-sum contract with a fixed price Correct answer.
  4. A unit-price contract with measured quantities

Explanation

In a lump-sum or fixed-price contract, the contractor agrees to perform the defined scope for a set price, so increases in labor or material costs are generally borne by the contractor. Cost-plus, time-and-materials, and unit-price arrangements shift more of that cost risk to the owner.

Question 42Contract Administration and Project Management

On a private Florida project, a plumbing subcontractor with no direct contract with the owner must serve a Notice to Owner by which deadline?

  1. Any time before recording a claim of lien
  2. Before first furnishing, or within 45 days after first furnishing Correct answer.
  3. Within 30 days after the first progress payment is made
  4. Within 90 days after the owner records the Notice of Commencement

Explanation

Under Florida's Construction Lien Law, a lienor not in privity with the owner must serve a Notice to Owner before first furnishing labor or materials, or within 45 days after first furnishing, whichever occurs first. Missing that deadline can defeat lien rights.

Question 43Contract Administration and Project Management

An owner on a Florida private project must record a Notice of Commencement no later than when?

  1. Before starting work, or within 90 days after starting Correct answer.
  2. Within 30 days after the building permit is issued
  3. Before the certificate of occupancy is issued
  4. Before the contractor submits its first payment application

Explanation

Florida law requires the owner to record the Notice of Commencement before commencing the improvement or within 90 days after commencing. The notice identifies the owner, contractor, surety, and other project information.

Question 44Contract Administration and Project Management

Which document gives up lien rights only for a stated amount and only if the payment identified in it is actually received?

  1. A conditional waiver and release on progress payment Correct answer.
  2. A Notice of Contest of Lien
  3. An unconditional waiver and release on final payment
  4. A satisfaction of lien

Explanation

A conditional waiver and release on progress payment becomes effective only when the stated payment is received; it does not waive rights beyond that amount. An unconditional waiver is effective regardless of whether payment clears.

Question 45Contract Administration and Project Management

Before concealed plumbing rough-in work may be covered, what must generally happen?

  1. The contractor must submit a final payment affidavit
  2. The owner must record a Notice of Termination
  3. Inspection and approval by the building official Correct answer.
  4. The plumber must obtain a certificate of occupancy before testing

Explanation

Building codes require rough-in inspections before work is concealed, so the inspector can verify pipe sizing, slope, venting, and connections. Covering work before inspection can require removal and re-inspection.

Question 46Contract Administration and Project Management

Before performing extra plumbing work outside the original contract scope, a contractor should normally obtain what?

  1. A verbal approval from the project superintendent and foreman
  2. A new Notice to Owner for the extra work
  3. A Notice of Contest of Lien before starting the work
  4. A written change order signed by the owner's authorized representative Correct answer.

Explanation

Extra work should be authorized in writing by someone with authority to bind the owner, typically through a signed change order that defines scope and price. Verbal directions can lead to payment disputes.

Question 47Contract Administration and Project Management

On a private Florida construction contract, retainage withheld from progress payments generally may not exceed what percentage of the contract price?

  1. 5 percent
  2. 20 percent
  3. 10 percent Correct answer.
  4. 15 percent

Explanation

Florida Statute 713.346 generally limits retainage on private construction contracts to 10 percent of the contract price, unless a lower amount is specified. The parties may agree to a lower retainage rate.

Question 48Contract Administration and Project Management

In a project schedule, the critical path is best described as which?

  1. The longest dependent sequence, which sets project duration Correct answer.
  2. The sequence of activities with the lowest labor cost
  3. The list of activities that can be delayed without affecting completion
  4. The activities performed by the prime contractor only

Explanation

The critical path is the longest chain of dependent activities through the schedule and determines the shortest possible project duration. Delaying any activity on the critical path delays completion unless the schedule is adjusted.

Question 49Contract Administration and Project Management

When a public owner requires a bid bond, the bond generally assures the owner that the successful bidder will do what?

  1. Complete the work even if the owner fails to pay
  2. Sign the contract and furnish the required bonds Correct answer.
  3. Pay all subcontractors within seven days of invoicing
  4. Correct any defects discovered during the one-year warranty period

Explanation

A bid bond secures the bidder's promise to execute the contract and provide the required performance and payment bonds if awarded the work. If the bidder refuses, the owner may claim against the bond, usually up to the stated penal sum.

Question 50Contract Administration and Project Management

The prime contract requires a domestic water booster pump, but the plumbing subcontract's scope of work omits it. The subcontractor installs it under a written change order from the prime. Who should ultimately bear the added cost?

  1. The subcontractor, because it should have noticed the omission
  2. The pump manufacturer, under its standard warranty
  3. The prime contractor, because its prime contract already included the pump Correct answer.
  4. The owner, through a change order to the prime contract

Explanation

The pump was already part of the prime contract scope, so the owner has already agreed to pay for it in the contract price. The omission from the subcontract is the prime contractor's procurement error, and the prime generally bears the added subcontract cost.