South Carolina Business and Law Practice Exam

The PSI South Carolina Business and Law prep covers eleven main areas, and they’re not created equal. Some topics hit harder than others:

The Heavy Hitters:

• Contracts and Agreements (12 questions) – This is your bread and butter
• Estimating and Bidding (10 questions) – Miss these and you’re toast
• Financial Management (7 questions) – Know your numbers or go home

The Supporting Cast:

• Project Management (5 questions)
• Labor Laws and Employment (3 questions)
• Tax Laws (3 questions)
• Liens (3 questions)

The rest? Just a question or two each, but don’t sleep on them. Every point counts when you need a 70% to pass.

These mirror PSI style: clear wording, practical context, one best answer. Use them along with your NASCLA book.

1. In a lump-sum contract, who bears the risk of underestimated quantities unless the contract states otherwise?

• A) Owner
• B) Architect
• C) Contractor
• D) Surety
  Answer: C) Contractor
  Reference: NASCLA SC 9th Ed., Contracts—lump-sum risk allocation.

2. Which financial statement shows a company’s position at a specific date?

• A) Income Statement
• B) Balance Sheet
• C) Cash Flow Statement
• D) Retained Earnings Statement
  Answer: B) Balance Sheet
  Reference: NASCLA SC 9th Ed., Financial Management—core financial statements.

3. What is the primary purpose of a performance bond?

• A) Protect the owner against defective design
• B) Ensure the contractor completes the project
• C) Cover subcontractor wages
• D) Insure equipment damage
  Answer: B) Ensure the contractor completes the project
  Reference: NASCLA SC 9th Ed., Bonds—performance vs. payment.

4. A change to scope is authorized only after which of the following?

• A) Verbal approval by the superintendent
• B) Written change order signed per the contract
• C) Email from the owner’s rep
• D) Field directive from a subcontractor
  Answer: B) Written change order signed per the contract
  Reference: NASCLA SC 9th Ed., Change Orders—documentation and approval.

5. OSHA Form 300A must be posted during which period?

• A) December 1 to December 31
• B) January 1 to February 1
• C) February 1 to April 30
• D) Year-round
  Answer: C) February 1 to April 30
  Reference: OSHA 29 CFR 1904; NASCLA SC 9th Ed., Safety recordkeeping.

6. Which cost is indirect?

• A) Brick
• B) Carpenter labor on a specific job
• C) Jobsite dumpster fee for Job 12
• D) Office rent
  Answer: D) Office rent
  Reference: NASCLA SC 9th Ed., Estimating and cost classification.

7. Under the Fair Labor Standards Act (FLSA), overtime for nonexempt employees is generally:

• A) 1.25 times regular rate after 40 hours/week
• B) 1.5 times regular rate after 40 hours/week
• C) Double time after 50 hours/week
• D) Straight time with comp time allowed
  Answer: B) 1.5 times regular rate after 40 hours/week
  Reference: NASCLA SC 9th Ed., Labor laws; FLSA.

8. A Notice of Furnishing/Preliminary Notice is primarily used to:

• A) Secure lien rights by providing early notice
• B) Terminate a subcontractor for cause
• C) Claim lost profits
• D) Trigger warranty obligations
  Answer: A) Secure lien rights by providing early notice
  Reference: NASCLA SC 9th Ed., Liens and notices; verify SC-specific timelines in state law.

9. Which ratio measures short-term liquidity?

• A) Debt-to-Equity
• B) Net Profit Margin
• C) Current Ratio
• D) Return on Assets
  Answer: C) Current Ratio
  Reference: NASCLA SC 9th Ed., Financial ratios.

10. For public work covered by the Miller Act (federal), which bond pair is typically required?

• A) Performance and bid
• B) Bid and maintenance
• C) Payment and performance
• D) Maintenance and supply
  Answer: C) Payment and performance
  Reference: NASCLA SC 9th Ed., Surety bonds—public work requirements.

11. When is an I-9 form required for new hires?

• A) Before first payroll is processed
• B) Within 3 business days of hire
• C) Within 10 calendar days of hire
• D) Only for government projects
  Answer: B) Within 3 business days of hire
  Reference: NASCLA SC 9th Ed., Employment eligibility verification.

12. What’s the best first step when a bid addendum is issued?

• A) Ignore unless it affects price
• B) Acknowledge receipt and update your bid documents
• C) Call the owner for clarification
• D) Submit your bid early
  Answer: B) Acknowledge receipt and update your bid documents
  Reference: NASCLA SC 9th Ed., Bidding—addenda and bid responsiveness.

Speaking of that NASCLA guide – yeah, you need it. The NASCLA Contractors Guide to Business, Law and Project Management – South Carolina Commercial Contractors, 9th Edition isn’t just recommended reading. It’s THE book the exam pulls from.

This isn’t some dry legal textbook either. It’s actually written for contractors by people who understand the business. You’ll learn stuff like:

• How to structure a business plan that actually works
• The real difference between cost-plus and lump-sum contracts
• Why OSHA Form 300 matters more than you think
• How to calculate payroll taxes without losing your mind

The environmental law section alone could save you thousands down the road when you’re dealing with permits and regulations.

Let’s be honest – the SC Business and Law exam isn’t exactly a cakewalk. The pass rate hovers around 65-70%, which means about one in three people walk out disappointed.

But here’s the thing: most people who fail aren’t failing because the material is impossibly difficult. They’re failing because they didn’t prepare properly for an open-book exam.

You see, there’s a huge difference between studying for a closed-book test and an open-book one. With closed-book, you memorize everything. With open-book? You need to know where to find everything – fast.

Here’s where most people mess up their prep strategy. They buy the book, read through it once, maybe twice, and think they’re ready. Wrong.

The best preparation isn’t reading – it’s practicing under real conditions. That means taking timed practice exams that mimic the actual PSI testing experience.

Why Online Practice Beats Static PDFs:
Static PDFs just sit there like dead fish. Online practice exams? They replicate the actual testing environment – the time pressure, the question format, even the way you can bookmark questions for later review.

When you’re taking practice tests, you should be using your book just like you will on exam day. Time yourself finding answers. Get comfortable with the index. Learn which sections are where.

Since this is an open-book exam, your relationship with that NASCLA guide is crucial. Here’s what successful test-takers do:

Tab Everything Important:

• Contract types and requirements
• Financial ratio formulas
• OSHA reporting timelines
• Lien deadlines
• Insurance coverage types

Highlight Smart, Not Hard:
Don’t highlight everything – that defeats the purpose. Mark key definitions, formulas, and lists you know you’ll need to reference quickly.

Know Your Index Inside Out:
Seriously, spend time with the index. When a question asks about “mechanic’s liens,” you need to flip to the right page in seconds, not minutes.

When you’re sitting in that PSI testing center, here’s your game plan:

First Pass – The Quick Wins:
Go through all 50 questions and answer the ones you know immediately. Don’t second-guess yourself on the obvious stuff.

Second Pass – The Book Work:
Now tackle the questions that require looking things up. You’ve got your tabs and highlights – use them.

Final Pass – The Tough Calls:
Use your remaining time for the tricky questions. Remember, you can bookmark questions for later review, just like in our online practice exams.

Time Management Reality Check:
Don’t spend more than 4 minutes on any single question. If you’re stuck, bookmark it and move on. You can always come back if time allows.

• Official PSI Bulletin for SC Exam
• South Carolina Licensing Board
• PSI Testing Portal
• NASCLA Contractors Guide

At the end of the day (yes, I said it—sometimes clichés work), passing the South Carolina Business and Law exam comes down to preparation and strategy. You need to know the material, sure, but you also need to know how to take the test.

The contractors who succeed aren’t necessarily the smartest—they’re the best prepared. They’ve taken multiple practice exams, they’ve tabbed their books until the pages are colorful, and they’ve developed that sixth sense for where to find answers quickly.

So what’s your next move? Get that book, start taking practice exams, and transform that anxiety into confidence. Your SC contractor license is waiting on the other side.