GA General Contractor Limited Tier Individual Exam Question 1 Which type of business entity protects personal assets from business liabilities?
- Sole proprietorship
- General partnership
- Limited liability company (LLC)
- Common law trust
Correct Answer: C
Explanation: An LLC separates personal and business liabilities, offering owners individual asset protection.
Question 2 Which license type in Georgia restricts contractors to smaller-scale projects with lower cost limits?
- Unlimited General Contractor
- Residential Basic Contractor
- General Contractor Limited Tier
- Trade Contractor
Correct Answer: C
Explanation: The Limited Tier license applies to smaller-scale projects within defined cost boundaries.
Question 3 Which of the following is typically required before a contractor can legally operate in Georgia?
- Completion of a single job
- Formal apprenticeship 1 / 4
GA General Contractor Limited Tier Individual Exam
- State-issued contractor’s license
- Membership in a trade union
Correct Answer: C
Explanation: Georgia requires a state-issued license for legal operation as a contractor.
Question 4 What is one main advantage of forming an S corporation as a contracting business?
- Unlimited personal liability
- Double taxation on profits
- Pass-through taxation
- No limits on project size
Correct Answer: C
Explanation: S corporations allow profits (and some losses) to pass directly to owners, avoiding double taxation.
Question 5 What is a key reason a contractor must hold a valid insurance policy?
- It reduces the likelihood of accidents
- It is optional for licensed contractors
- It protects the contractor and client against potential liabilities
- It guarantees contract completion
Correct Answer: C
Explanation: Insurance provides financial protection against property damage, injuries, and other liabilities. 2 / 4
GA General Contractor Limited Tier Individual Exam
Question 6 Which document outlines the tasks, responsibilities, and payment terms between a contractor and a client?
- Business permit
- Contract agreement
- Timesheet
- Inspection log
Correct Answer: B
Explanation: A written contract defines scope, responsibilities, and compensation terms for both parties.
Question 7 Which Georgia entity oversees general contractor licensing?
- Department of Transportation
- State Board for General Contractors
- Georgia Real Estate Commission
- Secretary of State’s office
Correct Answer: D
Explanation: The Secretary of State’s office administers and regulates professional licensing, including contractors.
Question 8 What is the primary function of a bid bond in construction?
- To guarantee higher profits
- To ensure competitive pricing 3 / 4
GA General Contractor Limited Tier Individual Exam
- To assure the project owner that the contractor will honor the bid
- To reduce paperwork for projects
Correct Answer: C
Explanation: A bid bond guarantees the contractor will proceed if selected; otherwise, financial penalties apply.
Question 9 Under Georgia law, which type of insurance is mandatory for contractors with employees?
- Health insurance
- Professional liability insurance
- Worker’s compensation insurance
- Disability insurance
Correct Answer: C
Explanation: Georgia law requires contractors with employees to carry worker’s compensation insurance.
Question 10 In project management, which process involves monitoring expenses against the projected budget?
- Contract drafting
- Cost control
- Quality assurance
- Safety compliance
Correct Answer: B
- / 4