Question 1

LLPs are governed by federal law.

Accepted Answer

A) True 
 B)False

Question 2

Agreements to contribute cash or property can act as a member's capital contribution to an LLC.

Accepted Answer

A) True 
 B)False

Question 3

A(n)________ refers to an agreement entered into among members that governs the affairs and business of the LLC and the relations among members,managers,and the LLC.

Accepted Answer

A)  certificate of interest 
B)  article of organization 
C)  operating agreement 
D)  article of amendment 
A)  certificate of interest 
B)  article of organization 
C)  operating agreement 
D)  article of amendment

Question 4

An LLC can amend its articles of organization at any time if the amendments have a majority vote among the members of the LLC.

Accepted Answer

A) True 
 B)False

Question 5

The LLC law of the state governs the operation of an LLC in that state.

Accepted Answer

A) True 
 B)False

Question 6

In a member-managed LLC,________ can bind the LLC to contracts.

Accepted Answer

A)  all members 
B)  only the member with the highest capital contribution 
C)  non-member managers 
D)  every shareholder 
A)  all members 
B)  only the member with the highest capital contribution 
C)  non-member managers 
D)  every shareholder

Question 7

________ is a duty owed by a member of a member-managed LLC and a manager of a manager-managed LLC not to engage in a known violation of law,intentional conduct,reckless conduct,or grossly negligent conduct that injures the LLC.

Accepted Answer

A)  Duty of discharge 
B)  Duty of restitution 
C)  Duty of loyalty 
D)  Duty of care 
A)  Duty of discharge 
B)  Duty of restitution 
C)  Duty of loyalty 
D)  Duty of care

Question 8

A term LLC can be continued after the expiration of its term if a(n)________.

Accepted Answer

A)  majority of the members of the LLC vote to continue the LLC as an at-will LLC 
B)  majority of the members of the LLC vote prior to the expiration date to continue the LLC for an additional specified term 
C)  amendment to the articles of organization is filed with the United States Secretary of Labor 
D)  amendment to the operating agreement is filed with the secretary of state 
A)  majority of the members of the LLC vote to continue the LLC as an at-will LLC 
B)  majority of the members of the LLC vote prior to the expiration date to continue the LLC for an additional specified term 
C)  amendment to the articles of organization is filed with the United States Secretary of Labor 
D)  amendment to the operating agreement is filed with the secretary of state

Question 9

Duty of care by a member to an LLC is a limited duty because it does not include ordinary negligence.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of liabilities of LLCs?

Accepted Answer

A)  Members of the LLC are liable to the extent of their capital contribution. 
B)  Managers of LLCs are personally liable for the debts, obligations, and liabilities of the LLC. 
C)  LLCs are not liable for any loss or injury caused by their employees. 
D)  LLCs are not liable for losses caused due to negligence of their managers during the ordinary course of business. 
A)  Members of the LLC are liable to the extent of their capital contribution. 
B)  Managers of LLCs are personally liable for the debts, obligations, and liabilities of the LLC. 
C)  LLCs are not liable for any loss or injury caused by their employees. 
D)  LLCs are not liable for losses caused due to negligence of their managers during the ordinary course of business.

Question 11

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 Melissa in a car accident.Which of the following is true in this scenario?

Accepted Answer

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

Question 12

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 13

Which of the following is true of the payment of distributional interest to a disassociating member?

Accepted Answer

A)  An at-will LLC must purchase a disassociated member's distributional interest only if there is a wrongful disassociation. 
B)  The price and terms of the distributional interest are fixed by the member-managers of the LLC. 
C)  A term LLC must purchase a disassociating member's distributional interest within a month of the member's notification of the disassociation. 
D)  Any damages caused to an LLC by wrongful withdrawal must be offset against the purchase price of the disassociating member's distributional interest. 
A)  An at-will LLC must purchase a disassociated member's distributional interest only if there is a wrongful disassociation. 
B)  The price and terms of the distributional interest are fixed by the member-managers of the LLC. 
C)  A term LLC must purchase a disassociating member's distributional interest within a month of the member's notification of the disassociation. 
D)  Any damages caused to an LLC by wrongful withdrawal must be offset against the purchase price of the disassociating member's distributional interest.

Question 14

In most states,the law restricts the use of LLPs to certain types of professionals,such as accountants,lawyers,and doctors.

Accepted Answer

A) True 
 B)False

Question 15

A tortfeasor is personally liable to persons he or she injures and to the heirs of persons who die because of his or her conduct.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true of compensation offered by an LLC?

Accepted Answer

A)  Managers of an LLC are entitled to compensation but not benefits. 
B)  Members are not entitled to compensation for their services toward the LLC. 
C)  Members are not indemnified for liabilities in the ordinary course of business. 
D)  Nonmanager members are not entitled to remuneration for services toward the LLC. 
A)  Managers of an LLC are entitled to compensation but not benefits. 
B)  Members are not entitled to compensation for their services toward the LLC. 
C)  Members are not indemnified for liabilities in the ordinary course of business. 
D)  Nonmanager members are not entitled to remuneration for services toward the LLC.

Question 17

Gerard and Tony organize an LLC by investing $55,000 and $45,000 respectively.The operating agreement states that profits are to be shared in the ratio of 55:45 between Gerard and Tony and makes no mention of sharing losses.The LLC incurs a loss of $100,000 in its first year.How is this loss shared?

Accepted Answer

A)  Both Gerard and Tony have to pay $50,000 each. 
B)  Gerard pays $55,000 while Tony pays $45,000. 
C)  Gerard pays $45,000 while Tony pays $55,000. 
D)  Gerard and Tony are not liable for the losses of the LLC. 
A)  Both Gerard and Tony have to pay $50,000 each. 
B)  Gerard pays $55,000 while Tony pays $45,000. 
C)  Gerard pays $45,000 while Tony pays $55,000. 
D)  Gerard and Tony are not liable for the losses of the LLC.

Question 18

Which of the following actions requires voting of all the members of a manager-managed LLC?

Accepted Answer

A)  expanding operations to another state 
B)  admitting new members 
C)  signing agreements with other businesses 
D)  expanding operations to another country 
A)  expanding operations to another state 
B)  admitting new members 
C)  signing agreements with other businesses 
D)  expanding operations to another country

Question 19

Three friends form an LLC by contributing $40,000,$80,000,and $120,000.The LLC is designated to be member-managed.The LLC needs to sign an agreement with a supplier for conducting the business.The authority to bind the LLC to a contract with the supplier lies with ________.

Accepted Answer

A)  only the member whose capital contribution to the LLC is the highest 
B)  all the three members 
C)  the nonmanager members 
D)  the member who is appointed as the manager 
A)  only the member whose capital contribution to the LLC is the highest 
B)  all the three members 
C)  the nonmanager members 
D)  the member who is appointed as the manager

Question 20

Explain wrongful disassociation.How does the payment of distributional interest to a disassociating member in an at-will LLC differ from a term LLC?

Accepted Answer

The disassociation of a member from an a

Exam 30: Limited Liability Companies and Limited Liability Partnerships

LLPs are governed by federal law.

Agreements to contribute cash or property can act as a member's capital contribution to an LLC.

A(n)________ refers to an agreement entered into among members that governs the affairs and business of the LLC and the relations among members,managers,and the LLC.

An LLC can amend its articles of organization at any time if the amendments have a majority vote among the members of the LLC.

The LLC law of the state governs the operation of an LLC in that state.

In a member-managed LLC,________ can bind the LLC to contracts.

________ is a duty owed by a member of a member-managed LLC and a manager of a manager-managed LLC not to engage in a known violation of law,intentional conduct,reckless conduct,or grossly negligent conduct that injures the LLC.

A term LLC can be continued after the expiration of its term if a(n)________.

Duty of care by a member to an LLC is a limited duty because it does not include ordinary negligence.

Which of the following is true of liabilities of LLCs?

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 Melissa in a car accident.Which of the following is true in this scenario?

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

Which of the following is true of the payment of distributional interest to a disassociating member?

In most states,the law restricts the use of LLPs to certain types of professionals,such as accountants,lawyers,and doctors.

A tortfeasor is personally liable to persons he or she injures and to the heirs of persons who die because of his or her conduct.

Which of the following is true of compensation offered by an LLC?

Which of the following actions requires voting of all the members of a manager-managed LLC?

Three friends form an LLC by contributing $40,000,$80,000,and $120,000.The LLC is designated to be member-managed.The LLC needs to sign an agreement with a supplier for conducting the business.The authority to bind the LLC to a contract with the supplier lies with ________.

Explain wrongful disassociation.How does the payment of distributional interest to a disassociating member in an at-will LLC differ from a term LLC?

Legal Heritage and the Digital Age

Constitutional Law for Business and E-commerce

Courts and Jurisdiction

Judicial Alternative Administrative and E-Dispute Resolution

Intentional Torts and Negligence

Criminal Law and Cyber Crimes

Intellectual Property and Cyber Piracy

Ethics and Social Responsibility of Business

Nature of Traditional and E-Contracts

Agreement and Consideration

Capacity and Legality

Genuineness of Assent and Statute of Frauds

Third-Party Rights and Discharge

Breach of Contract and Remedies

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties and Product Liability

Creation and Transfer of Negotiable Instruments

Holder in Due Course and Liability of Parties

Banking System and Electronic Financial Transactions

Credit, Real Property Financing, and Secured Transactions

Bankruptcy and Reorganization

Agency law

Small Business, Entrepreneurship, and Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Franchise and Special Forms of Business

Investor Protection, E-Securities, and Wall Street Reform

Antitrust Law and Unfair Trade Practices

Consumer Safety and Environmental Protection

Labor, Worker Protection, and Immigration Laws

Equal Opportunity in Employment

Personal Property, Bailment, and Insurance

Real Property, Landlord-Tenant Law, and Land Use Regulation

Family Law, Wills, and Trusts

Accountants' Duties and Liability

International and World Trade Law

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