Free BUSINESS & LAW EXAMINATION Practice Questions

Sample Practice Questions

Try these 10 sample questions from the BUSINESS & LAW EXAMINATION practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1Under Alabama's current general-contractor law, at what project cost does the general-contractor licensing threshold ordinarily begin?

   1. A. $50,000
   2. B. $75,000
   3. C. $100,000
   4. D. $250,000

   Answer: C

   Explanation: The Board's current law summary states that a general contractor undertakes work where the cost is "one hundred thousand dollars ($100,000) or more." Therefore $100,000 is the ordinary threshold.

   Reference: Board 2024 Law Changes — Definition of General Contractor; Act 2024-277 threshold update

2. 2For an ALDOT letting, how far in advance must a prospective bidder ordinarily file a properly executed prequalification application?

   1. A. 3 calendar days
   2. B. 7 calendar days
   3. C. 14 calendar days
   4. D. 30 calendar days

   Answer: C

   Explanation: ALDOT Specification 102.02 requires applicants to submit the forms "at least 14 calendar days prior to the date of opening bids" on which they wish to bid.

   Reference: 2026 Spec Book — Section 102.02, Prequalification of Bidders

3. 3An Alabama mortgage is created after construction work has commenced. As between that mortgage and a properly perfected construction lien, which generally has priority under §35-11-211?

   1. A. The later mortgage always has priority
   2. B. The construction lien has priority
   3. C. They share equal priority
   4. D. Priority depends only on who files a lawsuit first

   Answer: B

   Explanation: Section 35-11-211(a) says the construction lien "shall have priority over all other liens, mortgages, or incumbrances created subsequent to the commencement of work" on the building or improvement.

   Reference: Code 35 11 211 Primary — Alabama Code §35-11-211(a)

4. 4What minimum net worth and working capital does Alabama Rule 230-X-1-.02 set for a general-contractor applicant?

   1. A. $5,000 each
   2. B. $10,000 each
   3. C. $25,000 each
   4. D. $100,000 each

   Answer: B

   Explanation: Rule 230-X-1-.02 requires "a net worth and working capital of at least $10,000" to qualify for the lowest bid-limit classification.

   Reference: Chapter 230-X-1 Operations of the Board — Rule 230-X-1-.02

5. 5Which employee withholding certificates should an Alabama employer have each employee complete and retain?

   1. A. A-4 and W-4
   2. B. A-1 and 941
   3. C. A-3 and W-3
   4. D. 40ES and 1040ES

   Answer: A

   Explanation: The Alabama Department of Revenue payroll help sheet directs employers: "Have all employees complete Forms A-4 (state) and W-4 (federal) and keep these on file."

   Reference: Layout 1 — p. 4, All Businesses That Have Employees

6. 6Unless ALDOT directs otherwise in writing, when is a contractor expected to begin work after the notice to proceed?

   1. A. Within 5 calendar days
   2. B. Within 15 calendar days
   3. C. Within 30 calendar days
   4. D. Only after the first estimate

   Answer: B

   Explanation: ALDOT Specification 108.02(b) says the contractor is expected to begin work "within 15 calendar days after issuance of notice to proceed."

   Reference: 2026 Spec Book — Section 108.02(b), Time of Beginning Work

7. 7After an Alabama public-works award, how long does the successful bidder ordinarily have to execute the contract and furnish required bonds and insurance?

   1. A. 5 days
   2. B. 10 days
   3. C. 15 days
   4. D. 30 days

   Answer: C

   Explanation: Section 39-2-8 requires the contract, bonds, and evidence of insurance "within 15 days after the prescribed forms have been presented" for signature when no other period is specified.

   Reference: Alabama State Competitive Bid Public Works — Public Works Law, §39-2-8

8. 8Which identifier must an Alabama limited liability company's entity name contain?

   1. A. Limited Liability Company, L.L.C., or LLC
   2. B. Corporation or Incorporated only
   3. C. Limited Partnership only
   4. D. Professional Association only

   Answer: A

   Explanation: The Alabama Secretary of State says, "Your entity name must contain the words Limited Liability Company or the abbreviation L.L.C. or LLC."

   Reference: LLCs | Alabama Secretary of State — Domestic LLC Procedures

9. 9For a covered Alabama public-works contract, what amount must the performance bond ordinarily equal?

   1. A. A 5-percent bid guaranty, generally capped at $10,000
   2. B. A payment bond of at least 50 percent
   3. C. A performance bond equal to 100 percent
   4. D. No statutory bond when the contract is below $100,000

   Answer: C

   Explanation: Section 39-1-1 requires "a performance bond, with penalty equal to 100 percent of the amount of the contract price" before covered public work begins.

   Reference: Alabama State Competitive Bid Public Works — Public Works Law, §39-1-1(a); performance bond

10. 10For how long does Alabama's official business help sheet say financial and accounting records reflecting income and expenses should generally be kept, depending on the situation?

    1. A. One year
    2. B. Two years
    3. C. Three to six years
    4. D. Twenty years

    Answer: C

    Explanation: The help sheet directs businesses to keep records that clearly reflect income and expenses "from three (3) to six (6) years or dependent on your situation."

    Reference: Layout 1 — p. 3, record retention