Question 1

An LLC (limited liability company)is a(n)________.

Accepted Answer

A) unincorporated business entity 
B) incorporated business entity 
C) cooperative entity 
D) proprietorship 
A) unincorporated business entity 
B) incorporated business entity 
C) cooperative entity 
D) proprietorship

Question 2

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

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 3

Which of the following best defines the term distributional interest?

Accepted Answer

A) the ratio in which profit is distributed among members of an LLC (limited liability company) 
B) the process of distributing profits or losses according to the capital investment of the member with the interest 
C) the constitution of management of an LLC based on the extent of each member's financial investment 
D) a member's ownership interest in an LLC that entitles the member to receive distributions of money and property from the LLC 
A) the ratio in which profit is distributed among members of an LLC (limited liability company) 
B) the process of distributing profits or losses according to the capital investment of the member with the interest 
C) the constitution of management of an LLC based on the extent of each member's financial investment 
D) a member's ownership interest in an LLC that entitles the member to receive distributions of money and property from the LLC

Question 4

A limited liability company cannot be abbreviated as LC.

Accepted Answer

A) True 
 B)False

Question 5

________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of an LLC (limited liability company)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 6

Limited liability companies are created by federal law.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following methods are used to appoint a manager of a manager-managed LLC (limited liability company)?

Accepted Answer

A) appointed by the secretary of state 
B) vote of majority of the members 
C) unanimous vote of members 
D) unanimous vote of shareholders 
A) appointed by the secretary of state 
B) vote of majority of the members 
C) unanimous vote of members 
D) unanimous vote of shareholders

Question 8

A member's ownership interest in an LLC (limited liability company)is called a ________.

Accepted Answer

A) certificate of interest 
B) distributional interest 
C) collateral interest 
D) creditor's interest 
A) certificate of interest 
B) distributional interest 
C) collateral interest 
D) creditor's interest

Question 9

The United States does not permit an LLC (limited liability company)to be member-managed.

Accepted Answer

A) True 
 B)False

Question 10

A member of a manager-managed LLC (limited liability company)who is not a manager owes no fiduciary duty of loyalty or care to the LLC or its other members.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following actions requires voting by all members in a manager-managed LLC (limited liability company)?

Accepted Answer

A) issuing a certificate of interest 
B) admitting new members 
C) converting an existing business into an LLC 
D) expanding operations in another country 
A) issuing a certificate of interest 
B) admitting new members 
C) converting an existing business into an LLC 
D) expanding operations in another country

Question 12

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

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 13

A Limited liability company (LLC)cannot amend its articles of organization.

Accepted Answer

A) True 
 B)False

Question 14

An at-will Limited liability company (LLC)refers to an LLC that has no specified term of duration.

Accepted Answer

A) True 
 B)False

Question 15

A(n)________ is a special form of partnership in which all partners are limited partners,and there are no general partners.

Accepted Answer

A) domestic LLC 
B) proprietorship 
C) LLC (limited liability company) 
D) LLP (limited liability partnership) 
A) domestic LLC 
B) proprietorship 
C) LLC (limited liability company) 
D) LLP (limited liability partnership)

Question 16

An operating agreement can be amended orally.

Accepted Answer

A) True 
 B)False

Question 17

A limited liability company is an incorporated business entity.

Accepted Answer

A) True 
 B)False

Question 18

John,Nathan,and Julio form JNJ,LLC (limited liability company)with an equal capital investment by each.On his way to a business meeting with the clients of JNJ,Nathan accidentally injures a woman named 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 19

Distributional interest refers to a member's ownership interest in an LLC (limited liability company).

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) Doctors and lawyers cannot operate practices as LLCs. 
B) An LLC has to be organized in every state that it operates. 
C) "LC" cannot be used to denote an LLC. 
D) An LLC is a creation of federal law. 
A) Doctors and lawyers cannot operate practices as LLCs. 
B) An LLC has to be organized in every state that it operates. 
C) "LC" cannot be used to denote an LLC. 
D) An LLC is a creation of federal law.

Exam 39: Limited Liability Companies and Limited Liability Partnerships

An LLC (limited liability company)is a(n)________.

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

Which of the following best defines the term distributional interest?

A limited liability company cannot be abbreviated as LC.

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

Limited liability companies are created by federal law.

Which of the following methods are used to appoint a manager of a manager-managed LLC (limited liability company)?

A member's ownership interest in an LLC (limited liability company)is called a ________.

The United States does not permit an LLC (limited liability company)to be member-managed.

A member of a manager-managed LLC (limited liability company)who is not a manager owes no fiduciary duty of loyalty or care to the LLC or its other members.

Which of the following actions requires voting by all members in a manager-managed LLC (limited liability company)?

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

A Limited liability company (LLC)cannot amend its articles of organization.

An at-will Limited liability company (LLC)refers to an LLC that has no specified term of duration.

A(n)________ is a special form of partnership in which all partners are limited partners,and there are no general partners.

An operating agreement can be amended orally.

A limited liability company is an incorporated business entity.

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

Distributional interest refers to a member's ownership interest in an LLC (limited liability company).

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

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