Question 1

A member's ownership interest in an LLC is called a(n):

Accepted Answer

A)  dividend 
B)  capital account 
C)  distributional interest 
D)  derivative interest 
A)  dividend 
B)  capital account 
C)  distributional interest 
D)  derivative interest

Question 2

The name of an LLC must indicate in some fashion that it is an LLC.

Accepted Answer

A) True 
 B)False

Question 3

A member's distributional interest in an LLC is personal property.

Accepted Answer

A) True 
 B)False

Question 4

A non-manager member of an LLC is entitled to remuneration for services performed for the LLC including the winding up of the business of the LLC.

Accepted Answer

A) True 
 B)False

Question 5

An LLC is an at-will LLC unless it is designated as a term LLC.

Accepted Answer

A) True 
 B)False

Question 6

An LLC can generally be operated for any lawful purpose except certain regulated industries and certain professions.

Accepted Answer

A) True 
 B)False

Question 7

Based on management method,LLCs can be classified as either:

Accepted Answer

A)  member-managed or manager managed 
B)  member-managed or professionally managed 
C)  generally managed or micromanaged 
D)  manager-managed or at-will-managed 
E)  member-managed or term-managed 
A)  member-managed or manager managed 
B)  member-managed or professionally managed 
C)  generally managed or micromanaged 
D)  manager-managed or at-will-managed 
E)  member-managed or term-managed

Question 8

In order for an LLP to conduct business in a state other than the one it is organized in,it must register as a foreign LLP in any state in which it wants to conduct business.

Accepted Answer

A) True 
 B)False

Question 9

Wally is a college senior with a business idea for a company to sell over the Internet.Wally has a generous aunt who has given him $10,000 for Christmas every year of his life.Wally has invested this money wisely and thus will not need other owners in his new company.Wally wants to form an LLC for its ease of operation,limited liability,and flow-through tax treatment.Wally is also trying to decide where to live,because he can run this business from anywhere there is a phone line.Discuss Wally's situation.

Accepted Answer

An LLC will meet Wally's needs.Wally nee

Question 10

Under the Uniform Limited Liability Company Act,the withdrawal of a member from an LLC is known as:

Accepted Answer

A)  disaffirmance 
B)  voiding the interest 
C)  disassociation 
D)  dissolution 
A)  disaffirmance 
B)  voiding the interest 
C)  disassociation 
D)  dissolution

Question 11

In a member-managed LLC,all members have agency authority to bind the LLC to contracts.

Accepted Answer

A) True 
 B)False

Question 12

Jake and Kate are two members of an LLC with 15 members.This is a member-managed LLC with three of the members identified as the managers.Kate is one of these managers,though Jake is not.In reality,Jake and Kate together do most of the management for the LLC,contributing approximately equal amounts of time and energy.They both have spent some of their own money on behalf of the LLC.In one situation,Jake and Kate each put up $1,000 as a deposit on a contract entered into on behalf of the LLC that the other two managers voted to not perform.Jake and Kate want to be compensated for their time,want their expenses covered,and are worried about liability on the unperformed contract.Discuss their rights and liabilities.

Accepted Answer

As a manager,Kate is entitled to reasona

Question 13

An LLC must file what document with the secretary of state?

Accepted Answer

A)  articles of organization 
B)  operating agreement 
C)  profit and loss allocations of the members 
D)  the names of the members 
E)  B and D only 
A)  articles of organization 
B)  operating agreement 
C)  profit and loss allocations of the members 
D)  the names of the members 
E)  B and D only

Question 14

The Uniform Limited Liability Company Act only covers problems that arise in the formation of a limited liability company.

Accepted Answer

A) True 
 B)False

Question 15

A member who personally guarantees an obligation of an LLC will experience a personal loss only up to his or her capital contribution.

Accepted Answer

A) True 
 B)False

Question 16

Two CPA firms,one having 70 partners,and one having 40 partners,are planning to form a new CPA firm.They want to use a form of business organization that will give each of the 110 owners of the new firm limited liability.What are the available options to meet this goal?

Accepted Answer

A)  a limited liability partnership or a limited liability company 
B)  a limited liability partnership,a limited liability company,or an S corporation 
C)  a limited liability partnership,a limited liability company,or a limited partnership 
D)  a limited liability partnership,a limited partnership,or an S corporation 
A)  a limited liability partnership or a limited liability company 
B)  a limited liability partnership,a limited liability company,or an S corporation 
C)  a limited liability partnership,a limited liability company,or a limited partnership 
D)  a limited liability partnership,a limited partnership,or an S corporation

Question 17

Who has the right to manage an LLC?

Accepted Answer

A)  all members in all LLCs 
B)  all members in member-managed LLCs and only managers in manager-managed LLCs 
C)  the members making the five largest capital contributions,and the managers,if any 
D)  the organizers of the LLC and the managers,if any 
A)  all members in all LLCs 
B)  all members in member-managed LLCs and only managers in manager-managed LLCs 
C)  the members making the five largest capital contributions,and the managers,if any 
D)  the organizers of the LLC and the managers,if any

Question 18

Which of the following is true about the ability of a member of an LLC to bind a member-managed LLC to a contract?

Accepted Answer

A)  Members of the LLC have authority to bind the LLC,and this authority cannot be taken away. 
B)  Members of the LLC have authority to bind the LLC to contracts only if this authority is granted in the operating agreement. 
C)  Members of the LLC have authority to bind the LLC,and if this authority is restricted by agreement,then it will terminate any risk of the member binding the LLC to a contract. 
D)  Members of the LLC have authority to bind the LLC,and if this authority is restricted by agreement,there remains a risk that the member retains apparent authority to bind the LLC unless appropriate steps are taken. 
A)  Members of the LLC have authority to bind the LLC,and this authority cannot be taken away. 
B)  Members of the LLC have authority to bind the LLC to contracts only if this authority is granted in the operating agreement. 
C)  Members of the LLC have authority to bind the LLC,and if this authority is restricted by agreement,then it will terminate any risk of the member binding the LLC to a contract. 
D)  Members of the LLC have authority to bind the LLC,and if this authority is restricted by agreement,there remains a risk that the member retains apparent authority to bind the LLC unless appropriate steps are taken.

Question 19

If a member or a manager of an LLC negligently causes injury or death to another person,he or she is personally liable to the injured person or the heirs of a deceased person.

Accepted Answer

A) True 
 B)False

Question 20

For which of the following actions is an LLC responsible for damages if the action occurred within the ordinary course of the business of the LLC?

Accepted Answer

A)  members and managers only 
B)  managers and agents only 
C)  managers,agents,and employees only 
D)  agents and employees only 
E)  members,managers,agents,and employees 
A)  members and managers only 
B)  managers and agents only 
C)  managers,agents,and employees only 
D)  agents and employees only 
E)  members,managers,agents,and employees

Exam 39: Limited Liability Companies and Limited Liability Partnerships

A member's ownership interest in an LLC is called a(n):

The name of an LLC must indicate in some fashion that it is an LLC.

A member's distributional interest in an LLC is personal property.

A non-manager member of an LLC is entitled to remuneration for services performed for the LLC including the winding up of the business of the LLC.

An LLC is an at-will LLC unless it is designated as a term LLC.

An LLC can generally be operated for any lawful purpose except certain regulated industries and certain professions.

Based on management method,LLCs can be classified as either:

In order for an LLP to conduct business in a state other than the one it is organized in,it must register as a foreign LLP in any state in which it wants to conduct business.

Under the Uniform Limited Liability Company Act,the withdrawal of a member from an LLC is known as:

In a member-managed LLC,all members have agency authority to bind the LLC to contracts.

An LLC must file what document with the secretary of state?

The Uniform Limited Liability Company Act only covers problems that arise in the formation of a limited liability company.

A member who personally guarantees an obligation of an LLC will experience a personal loss only up to his or her capital contribution.

Two CPA firms,one having 70 partners,and one having 40 partners,are planning to form a new CPA firm.They want to use a form of business organization that will give each of the 110 owners of the new firm limited liability.What are the available options to meet this goal?

Who has the right to manage an LLC?

Which of the following is true about the ability of a member of an LLC to bind a member-managed LLC to a contract?

If a member or a manager of an LLC negligently causes injury or death to another person,he or she is personally liable to the injured person or the heirs of a deceased person.

For which of the following actions is an LLC responsible for damages if the action occurred within the ordinary course of the business of the LLC?

Legal Heritage and the Information Age

Court Systems and Jurisdiction

Judicial, Alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Strict Liability and Product 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

Internet 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

Sales and Lease Warranties

Creation of Negotiable Instruments

Transferability and Holder In Due Course

Liability,Defenses and Discharge

Checks, the Banking System, and E-Money

Creditor's and Debtor's Rights

Secured Transactions and Electronic Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment,Worker Protection,and Immigration Laws

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Businesses, Entrepreneurs, and General Partnerships

Limited Partnerships and Limited Liability Limited Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes Oxley Act

Corporate Acquisitions and Multinational Corporations

Franchises and Special Forms of Business

Investor Protection and Online Securities Transactions

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection and Global Warming

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord Tenant Law and Land Use Regulation

Insurance

Accountants' Liability

Wills, Trusts, and Elder Law

Family Law

International and World Trade Law

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