The test should cover everything in 14 CFR 61.89 and include some general questions out of the first section of part 91. Reckless operation, minimum safe altitudes, right of way rules, airspace requirements, preflight action required, etc.
There should also be some questions on V-speeds, aircraft systems basics, use of aircraft performance charts, as well as a few operational questions. For instance, the test we use asks "when should a go-around be initiated?" (whenever any crewmember feels a safe landing cannot be made). The test should also include a few questions about emergency procedures. 30-50 questions is about the right length.
The test should also be take-home/open book. After the student completes the test, the cfi will sit down with them and go over their answers, correcting any which were answered incorrectly and helping the student find the answer to any which they couldn't find on their own.