Question 1

Which of the following is true of the management of an LLC?

Accepted Answer

A) Members cannot become managers of an LLC. 
B) A manager-managed LLC shares management powers between members and managers. 
C) A nonmember can become a manager of an LLC. 
D) An LLC can be both member-managed and manager-managed simultaneously. 
A) Members cannot become managers of an LLC. 
B) A manager-managed LLC shares management powers between members and managers. 
C) A nonmember can become a manager of an LLC. 
D) An LLC can be both member-managed and manager-managed simultaneously.

Question 2

How does an LLC acquire capital? What are the obligations involved in a member's contribution of capital?

Accepted Answer

A member's capital contribution to an LL

Question 3

The duty of care for managers and members includes the duty not to usurp the LLC's opportunities.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true of the ULLCA?

Accepted Answer

A) It provides comprehensive laws for the formation of corporations. 
B) It provides uniform laws for the dissolution of LLCs. 
C) It is a state law that is uniform across the United States. 
D) It governs the operation of proprietorships and LLPs. 
A) It provides comprehensive laws for the formation of corporations. 
B) It provides uniform laws for the dissolution of LLCs. 
C) It is a state law that is uniform across the United States. 
D) It governs the operation of proprietorships and LLPs.

Question 5

Mary, Harold, Harvey, and William form an LLC by contributing $20, 000, $50, 000, $55, 000, and $150, 000 respectively.The LLC is designated to be member-managed.When a decision is put to vote, Mary, Harvey, and Harold vote "yes, " whereas William votes "no".Which of the following is true in this context?

Accepted Answer

A) William's decision prevails as he has invested the maximum capital. 
B) No conclusion can be derived as the vote is not unanimous. 
C) Mary, Harvey, Harold's decision prevails due to simple majority. 
D) The decision is put to vote among employees of the company. 
A) William's decision prevails as he has invested the maximum capital. 
B) No conclusion can be derived as the vote is not unanimous. 
C) Mary, Harvey, Harold's decision prevails due to simple majority. 
D) The decision is put to vote among employees of the company.

Question 6

________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC.

Accepted Answer

A) Operating agreements 
B) Certificates of interest 
C) Articles of organization 
D) Articles of amendment 
A) Operating agreements 
B) Certificates of interest 
C) Articles of organization 
D) Articles of amendment

Question 7

A(n)________ refers to a document that states the terms for converting an existing business to an LLC.

Accepted Answer

A) articles of termination 
B) operating agreement 
C) articles of organization 
D) agreement of conversion 
A) articles of termination 
B) operating agreement 
C) articles of organization 
D) agreement of conversion

Question 8

A nonmanager member of an LLC is not entitled to remuneration for services performed for the LLC at any time.

Accepted Answer

A) True 
 B)False

Question 9

Articles of organization are documents that evidence a member's ownership interest in an LLC.

Accepted Answer

A) True 
 B)False

Question 10

In a manager-managed LLC, it is necessary that the manager is a member of that LLC.

Accepted Answer

A) True 
 B)False

Question 11

Members of an LLC have ________ liability.

Accepted Answer

A) limited 
B) unlimited personal 
C) unlimited capital 
D) strict 
A) limited 
B) unlimited personal 
C) unlimited capital 
D) strict

Question 12

The United States does not permit an LLC to be member-managed.

Accepted Answer

A) True 
 B)False

Question 13

A limited liability company cannot be abbreviated as LC.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of LLC taxation?

Accepted Answer

A) An LLC is taxed as a corporation in all general cases. 
B) Income or losses of an LLC do not flow through to the members' individual income tax returns. 
C) Members of an LLC are subject to double taxation. 
D) An LLC is not taxed at the entity level. 
A) An LLC is taxed as a corporation in all general cases. 
B) Income or losses of an LLC do not flow through to the members' individual income tax returns. 
C) Members of an LLC are subject to double taxation. 
D) An LLC is not taxed at the entity level.

Question 15

Managers of LLCs are not personally liable for the debts, obligations, and liabilities of the LLC they manage.

Accepted Answer

A) True 
 B)False

Question 16

An LLC cannot amend its articles of organization.

Accepted Answer

A) True 
 B)False

Question 17

A(n)________ refers to a document that evidences a member's ownership interest in an LLC.

Accepted Answer

A) certificate of interest 
B) articles of organization 
C) operating agreement 
D) agreement of conversion 
A) certificate of interest 
B) articles of organization 
C) operating agreement 
D) agreement of conversion

Question 18

The existence of an LLC begins when the articles of organization are filed.

Accepted Answer

A) True 
 B)False

Question 19

John, Nathan, and Julio form JNJ, LLC with equal capital investment each.On his way to a business meeting with clients of JNJ, Nathan accidentally injures Jessica in a car accident.Which of the following is true in this scenario?

Accepted Answer

A) Jessica can claim damages from JNJ, LLC as she was injured in the ordinary course of business. 
B) Jessica can only claim damages from Nathan and not from JNJ, LLC. 
C) Jessica can choose to claim damages from any one of the three. 
D) John, Nathan, and Julio have equal personal liability to Jessica's injuries. 
A) Jessica can claim damages from JNJ, LLC as she was injured in the ordinary course of business. 
B) Jessica can only claim damages from Nathan and not from JNJ, LLC. 
C) Jessica can choose to claim damages from any one of the three. 
D) John, Nathan, and Julio have equal personal liability to Jessica's injuries.

Question 20

Peter, Preston, and Penny organize an LLC in the month of January.While composing the operating agreement, they forget to include the amendment clause.Six months later, the situation demands an amendment to the operating agreement.Which of the following would best apply in this scenario?

Accepted Answer

A) The operating agreement can be amended if all three members approve. 
B) The operating agreement cannot be amended as it contains no amendment provision. 
C) The operating agreement can be amended with the affirmative majority of all shareholders. 
D) The operating agreement can be amended only 60 days after a new amendment provision is included. 
A) The operating agreement can be amended if all three members approve. 
B) The operating agreement cannot be amended as it contains no amendment provision. 
C) The operating agreement can be amended with the affirmative majority of all shareholders. 
D) The operating agreement can be amended only 60 days after a new amendment provision is included.

Exam 39: Limited Liability Companies and Limited Liability Partnerships

Which of the following is true of the management of an LLC?

How does an LLC acquire capital? What are the obligations involved in a member's contribution of capital?

The duty of care for managers and members includes the duty not to usurp the LLC's opportunities.

Which of the following is true of the ULLCA?

________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC.

A(n)________ refers to a document that states the terms for converting an existing business to an LLC.

A nonmanager member of an LLC is not entitled to remuneration for services performed for the LLC at any time.

Articles of organization are documents that evidence a member's ownership interest in an LLC.

In a manager-managed LLC, it is necessary that the manager is a member of that LLC.

Members of an LLC have ________ liability.

The United States does not permit an LLC to be member-managed.

A limited liability company cannot be abbreviated as LC.

Which of the following is true of LLC taxation?

Managers of LLCs are not personally liable for the debts, obligations, and liabilities of the LLC they manage.

An LLC cannot amend its articles of organization.

A(n)________ refers to a document that evidences a member's ownership interest in an LLC.

The existence of an LLC begins when the articles of organization are filed.

John, Nathan, and Julio form JNJ, LLC with equal capital investment each.On his way to a business meeting with clients of JNJ, Nathan accidentally injures Jessica in a car accident.Which of the following is true in this scenario?

Peter, Preston, and Penny organize an LLC in the month of January.While composing the operating agreement, they forget to include the amendment clause.Six months later, the situation demands an amendment to the operating agreement.Which of the following would best apply in this scenario?

Legal Heritage and the Digital Age

Courts and Jurisdiction

Judicial,Alternative,and E-Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

E-Commerce and Digital Law

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, Defenses, and Discharge

Banks, E-Money, and Financial Reform

Credit,Mortgages,and Debtor's Rights

Secured Transactions and E-Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment, Worker Protection, and Immigration Law

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Business, Entrepreneurship, and General Partnerships

Limited Partnerships and Special Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Franchises and Special Forms of Businesses

Investor Protection, E-Securities, and Wall Street Reform

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord-Tenant Law and Land Use Regulation

Insurance

Accountants' Duties and Liability

Wills Trusts and Estates

Family Law

International and World Trade Law

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