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Nevada Law & Business - Recordkeeping & Taxes

Nevada Law & Business - Recordkeeping & Taxes

Nevada Business & Law — Section 9: Recordkeeping & Taxes

PSI targets: record retention periods (payroll, tax, contracts, safety), job costing (direct vs indirect costs), overhead, WIP & revenue recognition, sales/use tax basics for contractors, equipment costing, internal controls, and audit readiness. In your NASCLA book, tab any tables/boxes that list what to keep and how long—and highlight definitions of job cost terms.

1) Records to Keep & Retention Durations are test bait

Core Business Records

  • Corporate/LLC: articles, bylaws/operating agreement, minutes, stock/ownership ledger.
  • Licensing: NV contractor license, QI documentation, bond/insurance certificates.
  • Contracts: prime contract, subcontracts, change orders, RFIs, addenda, pay apps, waivers.
  • Project files: drawings/specs, daily reports, photos, correspondence.

Payroll/HR & Tax

  • Timecards & payroll, wage rates, deductions, OT records, certified payroll (if public).
  • Personnel: applications, reviews, discipline (I-9s/medical kept separate & secure).
  • Tax: returns, W-2/W-3, 1099-NEC/1096, sales/use tax filings, support ledgers.
  • Retention: mark each duration shown in the book for these record groups.
2) Job Costing Fundamentals Direct vs Indirect

Direct Costs

  • Labor, materials, subs, equipment used on a specific job.
  • Track by cost code/phase; tie to purchase orders & timecards.

Indirect Costs

  • Site overhead (supervision, temp facilities, small tools) and home office overhead (G&A).
  • Allocate systematically; don’t bury direct costs as overhead.

WIP & Profitability

  • Work-in-Progress schedules track cost to date, billings, and earned revenue.
  • Over/under-billing affects cash and reported profit.
3) Revenue Recognition & Change Orders Percent-complete logic
  • Recognize revenue by percent complete on long-term projects per method shown in book.
  • Approved change orders update contract value; pending COs tracked separately until executed.
  • Document differing site conditions and time impact—feeds WIP and schedule of values (SOV).
4) Sales/Use Tax Basics for Contractors Contractor = consumer (often)

Core Ideas

  • Contractors are commonly treated as the consumer of materials incorporated into real property.
  • Sales tax generally paid on material purchases; use tax may apply on out-of-state buys used in state.
  • Resale certificates apply when acting as a retailer (not typical for improvements to real property).

Controls

  • Maintain vendor invoices, exemption/ resale documents when applicable.
  • Track tax on owner-furnished items if contractor installs (labor vs taxable items per book).
5) Equipment Costing & Small Tools Own vs Rent
  • Internal equipment rates include ownership (depreciation/interest/insurance) + operating (fuel, maintenance).
  • Charge rates to jobs via time sheets/telemetry; small tools often treated as indirect unless specifically tracked.
  • Compare own vs rent: utilization threshold drives decision.
6) Internal Controls & Fraud Prevention Audit-ready

Controls

  • Segregate duties: timekeeping → approval → payroll processing by different people when possible.
  • POs required; 3-way match (PO, receipt, invoice) before payment.
  • Numbered change orders; signatures required; no verbal only.

Cash & AR/AP

  • Reconcile bank monthly; lockbox or dual control for deposits.
  • Keep lien waivers with pay apps; track retainage.
  • Document prompt-pay timelines; avoid paying without unconditional waivers when required.
7) Electronic Records, Backup & Access Who can see what
  • Use a document control plan: file naming, versioning, access permissions.
  • Back up project & accounting data (off-site/cloud + local) on a schedule.
  • Protect PII (I-9/medical) and confidential bids; log who accessed what/when.
8) Financial Statements & Bonding What sureties look for
  • Income statement, balance sheet, cash flow, WIP schedule; tie-out AR/AP aging to jobs.
  • Sureties monitor working capital, equity, backlog profitability, and timely financials for license limits.
9) Tax Filings & Year-End Forms & deadlines
  • W-2/1099 processing; reconcile payroll and vendor totals to GL.
  • Inventory/consumables counts; equipment depreciation schedules.
  • Keep support for deductions/credits; maintain copies of returns and confirmations.
10) Audit Readiness & Closeout Prove it fast
  • Index your project box: contract, COs, subcontracts, pay apps, waivers, certified payroll, inspections.
  • At closeout: organize warranties/O&Ms, as-builts, final waivers, retainage release support.

Practice Exam — 60 Questions Answers & brief explanations under each

1. The purpose of a document retention policy is to:

  1. Reduce estimating time
  2. Define what to keep and for how long
  3. Set bid dates
  4. Replace contracts
Answer

B — Highlight durations in your book.

2. Which should be filed separately from general personnel files?

  1. Performance reviews
  2. I-9s and medical records
  3. Training certs
  4. Applications
Answer

B — Confidential & limited access.

3. Direct job costs include:

  1. Owner’s salary
  2. Concrete, rebar, field labor for the project
  3. Corporate rent
  4. CPA fees
Answer

B — Tied to a specific job.

4. Home office overhead is typically:

  1. A direct cost
  2. General & administrative expense allocated to jobs via markup
  3. Small tools
  4. Retainage
Answer

B — G&A recovered via margin.

5. A WIP schedule helps identify:

  1. Colors
  2. Over-/under-billings and earned revenue
  3. Lien deadlines
  4. OSHA logs
Answer

B — Tracks job progress vs billings.

6. Change orders affect revenue recognition when they are:

  1. Rumored
  2. Approved and added to contract value
  3. On a napkin
  4. At punch
Answer

B — Pending COs tracked separately.

7. Contractors are commonly treated as the consumer of:

  1. Materials incorporated into real property
  2. Owner’s design fees
  3. Sub’s overhead
  4. Payroll taxes
Answer

A — Sales tax at purchase; use tax if applicable.

8. Use tax generally applies when:

  1. Materials are purchased out of state and used in state without sales tax paid
  2. You buy coffee
  3. Labor is billed
  4. Insurance is renewed
Answer

A — Self-assessed to equalize tax.

9. A resale certificate is typically used when the contractor:

  1. Acts as a retailer of tangible goods
  2. Builds real property only
  3. Buys fuel
  4. Pays payroll
Answer

A — Not common for real-property construction.

10. Three-way match compares:

  1. Invoice to tax return
  2. PO, receiving, and vendor invoice
  3. Bid to drawings
  4. Schedule to weather
Answer

B — Control to prevent overpayment.

11. Small tools are usually treated as:

  1. Direct cost to each job
  2. Indirect/site or overhead unless specifically tracked
  3. Owner draw
  4. Retainage
Answer

B — Cost to operate business.

12. Equipment charge rates should include:

  1. Fuel only
  2. Ownership + operating components
  3. Bid bond
  4. Sales tax only
Answer

B — Recover total cost of use.

13. Retainage is best tracked in:

  1. AR/AP with separate retainage accounts
  2. Petty cash
  3. Payroll
  4. Nothing needed
Answer

A — Prevents missed collections/releases.

14. A vendor invoice missing a PO should:

  1. Be paid immediately
  2. Be routed for approval or matched to a retroactive PO per policy
  3. Be shredded
  4. Be billed to owner
Answer

B — Enforce purchasing controls.

15. The schedule of values (SOV) ties to:

  1. Bid bonds
  2. Progress billing line items
  3. Tool inventory
  4. Safety plan
Answer

B — Basis for pay apps.

16. Certified payrolls should be backed by:

  1. Photos only
  2. Timecards and fringe detail
  3. Bids
  4. Warranty book
Answer

B — Documentation for audits.

17. Over-billing on WIP means:

  1. Billed less than earned
  2. Billed more than earned to date
  3. No effect on cash
  4. Always wrong
Answer

B — Creates temporary cash advantage.

18. Under-billing often signals:

  1. Perfect cost control
  2. Scope changes not billed or slow change order execution
  3. Low retainage
  4. No problem
Answer

B — Watch cash and profit timing.

19. Which record supports a sales/use tax audit?

  1. Daily report
  2. Vendor invoices and tax accrual logs
  3. As-builts
  4. Safety talk
Answer

B — Proof of tax paid/accrued.

20. Job cost codes exist to:

  1. Decorate reports
  2. Group costs by trade/phase for control and estimating feedback
  3. Increase tax
  4. Replace safety
Answer

B — Compare estimate vs actual.

21. A valid change order should include:

  1. Handshake only
  2. Description, price/time impact, signatures
  3. Verbal ok
  4. Sticker
Answer

B — Written approvals.

22. Banking best practice:

  1. No recon
  2. Monthly bank reconciliations by someone independent of check writing
  3. Single signer with blank checks
  4. Cash only
Answer

B — Core anti-fraud control.

23. Progress payment should be released when:

  1. Work is complete and waivers/documents are in order per contract
  2. Vendor asks nicely
  3. Owner calls
  4. It rains
Answer

A — Tie to SOV and waivers.

24. The best place to find retention durations for payroll is:

  1. Safety plan
  2. Your NASCLA retention table
  3. Bid form
  4. Drawing index
Answer

B — Tab that page.

25. A PO system primarily controls:

  1. Labor OT
  2. Material & equipment purchases
  3. Wage rates
  4. Insurance
Answer

B — Commitments tracked pre-invoice.

26. If materials are bought tax-free for resale but installed into real property:

  1. No tax ever
  2. Use tax may be owed on consumption
  3. Payroll tax applies
  4. Bond premium applies
Answer

B — Contractor consumed the item.

27. Which belongs in the project closeout file?

  1. W-2s
  2. As-builts, O&Ms, warranties, final waivers
  3. Bid day notes only
  4. OSHA 300A
Answer

B — Closeout deliverables.

28. A “percent-complete” method recognizes revenue based on:

  1. Cash only
  2. Progress toward completion using cost or other input measures
  3. Final inspection date
  4. Bid date
Answer

B — Tie to cost/effort incurred.

29. Subcontractor lien waivers should be collected:

  1. Only at final
  2. With each progress payment per contract
  3. Never
  4. At punch list only
Answer

B — Conditional → unconditional when paid.

30. AR aging shows:

  1. What you owe vendors
  2. Customer invoices by days outstanding
  3. Payroll by class
  4. Tax by rate
Answer

B — Collect faster to protect cash.

31. A “source document” is:

  1. Rumor
  2. Original evidence (invoice, timecard, receipt) supporting an entry
  3. Spec section
  4. Poster
Answer

B — Keep and index.

32. To prove equipment charges to a job, keep:

  1. Only photos
  2. Usage logs/telematics and internal rate sheets
  3. None
  4. Owner’s diary
Answer

B — Audit trail.

33. Which is not an internal control?

  1. Segregation of duties
  2. Three-way match
  3. Unnumbered change orders
  4. Bank reconciliation
Answer

C — Number COs to control.

34. A vendor statement reconciliation ensures:

  1. Payroll accuracy
  2. AP completeness and correct balances
  3. Bid compliance
  4. Safety compliance
Answer

B — Catch missing invoices/credits.

35. If a change order is performed without written approval:

  1. No issue
  2. Risk of non-payment; document notices and seek ratification promptly
  3. Guaranteed payment
  4. Waives rights
Answer

B — Follow contract procedure.

36. Which report ties field production to cost?

  1. Daily report with quantities installed and hours
  2. Safety talk
  3. RFI log
  4. Bid tab
Answer

A — Compare to estimate.

37. Cash receipts should be deposited:

  1. Monthly
  2. Intact and promptly with dual control
  3. In petty cash
  4. With the superintendent
Answer

B — Reduce theft risk.

38. If a sub’s insurance lapses mid-project:

  1. Ignore
  2. Stop work/withhold payment until reinstated per contract
  3. Pay more
  4. Reduce retainage
Answer

B — Risk transfer control.

39. A “permanent file” includes:

  1. Only invoices
  2. Corporate documents, licensing, key agreements
  3. Daily reports
  4. Tool logs
Answer

B — Long-life records.

40. Job cost reports should be reviewed:

  1. Annually
  2. Regularly (weekly/monthly) with PM/foreman
  3. Never
  4. Only at closeout
Answer

B — Control cost drift early.

41. A purchase for an exempt purpose requires:

  1. No documents
  2. Proper exemption/resale certificate retained on file
  3. Verbal ok
  4. Text
Answer

B — Audit defense.

42. Petty cash should be:

  1. Uncontrolled
  2. Imprest (fixed) amount with receipts & approvals
  3. Unlimited
  4. Mixed with payroll
Answer

B — Control small buys.

43. If a PO is exceeded, AP should:

  1. Pay anyway
  2. Route for variance approval per policy
  3. Refuse vendor permanently
  4. Ignore
Answer

B — Enforce limits.

44. A subcontract must include:

  1. No scope
  2. Scope, schedule, price, flow-down clauses, insurance/bonding
  3. Only signatures
  4. Logo
Answer

B — Controls risk/downstream compliance.

45. Which is evidence of delivery for electronic pay stubs?

  1. Memory
  2. System access logs or signed acknowledgment
  3. Verbal claim
  4. None
Answer

B — Keep proof.

46. On T&M tickets, include at minimum:

  1. Lunch order
  2. Date, location, labor/equipment hours, materials, signatures
  3. Only job name
  4. PO number only
Answer

B — Support extra work pricing.

47. If you discover an under-accrued use tax:

  1. Ignore
  2. Self-assess and correct in current/next filing with documentation
  3. Bill sub
  4. Charge to owner
Answer

B — Clean books/audit trail.

48. Depreciation schedules support:

  1. Payroll
  2. Asset cost recovery and book/tax reporting
  3. Bid bonds
  4. Lien rights
Answer

B — Fixed asset tracking.

49. A “tickler” system is used to:

  1. Track safety talks
  2. Remind of deadlines (licenses, filings, insurance renewals)
  3. Order coffee
  4. Hire
Answer

B — Calendar of compliance dates.

50. The fastest way to answer retention questions on the exam is to:

  1. Guess
  2. Go to your “Recordkeeping & Taxes” tab and read the duration table you highlighted
  3. Check OSHA
  4. Check liens
Answer

B — The book lists durations.

51. Backups should be:

  1. Occasional
  2. Automated, tested, and kept off-site/cloud
  3. Local only
  4. On a thumb drive in a desk
Answer

B — Disaster recovery.

52. “Cost to complete” forecasting uses:

  1. Only budget
  2. Actual productivity and remaining scope
  3. Only contract value
  4. Bond premium
Answer

B — Update EACs realistically.

53. A vendor credit memo should be:

  1. Framed
  2. Matched to the original invoice and posted
  3. Ignored
  4. Sent to payroll
Answer

B — Reduce AP properly.

54. Electronic signatures on COs and waivers are:

  1. Never acceptable
  2. Acceptable if authorized by contract and law
  3. Always invalid
  4. Only for staff
Answer

B — Many platforms permitted.

55. Inventory of consumables should be:

  1. Ignored
  2. Counted and reconciled at year-end
  3. Expensed without record
  4. Given away
Answer

B — Accurate COGS.

56. If a sub’s W-9 is missing:

  1. Pay anyway
  2. Request and hold payment if your policy requires before issuing 1099s
  3. Issue W-2
  4. Waive tax
Answer

B — Collect tax info first.

57. “Earned value” compares:

  1. Bid to low
  2. Budgeted cost of work performed vs actual cost
  3. Specs to drawings
  4. Tools to fuel
Answer

B — Performance metric.

58. An owner-furnished, contractor-installed item requires:

  1. No records
  2. Tracking for warranty, tax treatment per contract, and handling/installation costs
  3. Sales to owner
  4. Ignore
Answer

B — Document handling/installation.

59. During a tax audit, the most persuasive evidence is:

  1. Memory
  2. Contemporaneous source documents and ledgers
  3. Hearsay
  4. Marketing
Answer

B — Keep organized binders/indexes.

60. If a question mentions retention period, job cost term, WIP, sales/use tax, or internal control, your quickest move is:

  1. Contracts tab
  2. Liens tab
  3. Recordkeeping & Taxes tab
  4. Safety tab
Answer

C — You pre-highlighted this section.

Next: Section 10 — Compliance & Discipline →