Question 1

A Limited liability company (LLC)is taxed at the entity level.

Accepted Answer

A) True 
 B)False  False

Question 2

Gerard and Tony organize an LLC (limited liability company)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. A

Question 3

A Limited liability company (LLC)organized in the United States is considered a domestic LLC throughout the United States.

Accepted Answer

A) True 
 B)False  False

Question 4

The income or losses of a Limited liability company (LLC)flow through to the members' individual income tax returns,which avoids double taxation.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true of the liabilities of LLCs (limited liability companies)?

Accepted Answer

A) Members of LLCs are liable to the extent of their capital contribution. 
B) Managers of LLCs are personally liable for the debts, obligations, and liabilities of the LLCs. 
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 LLCs are liable to the extent of their capital contribution. 
B) Managers of LLCs are personally liable for the debts, obligations, and liabilities of the LLCs. 
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 6

How does an LLC (limited liability company)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 7

Managers of LLCs (limited liability companies)are not personally liable for the debts,obligations,and liabilities of the LLC they manage.

Accepted Answer

A) True 
 B)False

Question 8

An operating agreement is a document that states the terms for converting an existing business to a Limited liability company (LLC).

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

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

Question 10

Which of the following is true of LLC (limited liability company)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 11

A(n)________ LLC (limited liability company)has a specified term of duration.

Accepted Answer

A) short-form 
B) general 
C) term 
D) at-will 
A) short-form 
B) general 
C) term 
D) at-will

Question 12

Distinguish between a member-managed and a manager-managed LLC (limited liability company).Mention the exceptional actions that cannot be delegated to managers.

Accepted Answer

In a member-managed LLC,each member has

Question 13

Which of the following is true of the Uniform Limited Liability Company Act?

Accepted Answer

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

Question 14

An LLC (limited liability company)is a ________ in the state in which it is organized.

Accepted Answer

A) sole proprietorship 
B) domestic LLC 
C) term LLC 
D) general partnership 
A) sole proprietorship 
B) domestic LLC 
C) term LLC 
D) general partnership

Question 15

A ________ is a person who intentionally or unintentionally causes injury or death to another person.

Accepted Answer

A) protagonist 
B) supplanter 
C) reversionist 
D) tortfeasor 
A) protagonist 
B) supplanter 
C) reversionist 
D) tortfeasor

Question 16

Explain the process that exempts members of an LLC (limited liability company)from double taxation.

Accepted Answer

Under the Internal Revenue Code and regu

Question 17

In a manager-managed LLC (limited liability company),it is necessary that the manager is a member of that LLC.

Accepted Answer

A) True 
 B)False

Question 18

A Limited liability company (LLC)can be organized in only one state.

Accepted Answer

A) True 
 B)False

Question 19

The disassociation of a member from a term LLC (limited liability company)before the expiration of the specified term is wrongful.

Accepted Answer

A) True 
 B)False

Question 20

Members of an LLC (limited liability company)have ________ liability.

Accepted Answer

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

Exam 39: Limited Liability Companies and Limited Liability Partnerships

A Limited liability company (LLC)is taxed at the entity level.

A Limited liability company (LLC)organized in the United States is considered a domestic LLC throughout the United States.

The income or losses of a Limited liability company (LLC)flow through to the members' individual income tax returns,which avoids double taxation.

Which of the following is true of the liabilities of LLCs (limited liability companies)?

How does an LLC (limited liability company)acquire capital? What are the obligations involved in a member's contribution of capital?

Managers of LLCs (limited liability companies)are not personally liable for the debts,obligations,and liabilities of the LLC they manage.

An operating agreement is a document that states the terms for converting an existing business to a Limited liability company (LLC).

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

Which of the following is true of LLC (limited liability company)taxation?

A(n)________ LLC (limited liability company)has a specified term of duration.

Distinguish between a member-managed and a manager-managed LLC (limited liability company).Mention the exceptional actions that cannot be delegated to managers.

Which of the following is true of the Uniform Limited Liability Company Act?

An LLC (limited liability company)is a ________ in the state in which it is organized.

A ________ is a person who intentionally or unintentionally causes injury or death to another person.

Explain the process that exempts members of an LLC (limited liability company)from double taxation.

In a manager-managed LLC (limited liability company),it is necessary that the manager is a member of that LLC.

A Limited liability company (LLC)can be organized in only one state.

The disassociation of a member from a term LLC (limited liability company)before the expiration of the specified term is wrongful.

Members of an LLC (limited liability company)have ________ liability.

Legal Environment of Business and Online Commerce

Courts and Jurisdiction

Judicial, alternative, and Online 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 Crime

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

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

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, defenses, and Discharge

Banking System and Electronic Financial Transactions

Credit, mortgages, and Debtors Rights

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, agents, and Independent Contractors

Employment, worker Protection, and Immigration Law

Labor Law

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, real Property, and Insurance

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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