Question 1

A(n) ________ LLC 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 C

Question 2

Which of the following is true of capital contribution to an LLC (limited liability company)?

Accepted Answer

A)  Capital contribution can only be in the form of money or tangible property. 
B)  Promissory notes are not considered capital contribution. 
C)  A member's obligation to contribute capital is excused by the member's disability or other inability to perform. 
D)  A member's obligation to contribute capital is not excused by the member's death. 
A)  Capital contribution can only be in the form of money or tangible property. 
B)  Promissory notes are not considered capital contribution. 
C)  A member's obligation to contribute capital is excused by the member's disability or other inability to perform. 
D)  A member's obligation to contribute capital is not excused by the member's death. D

Question 3

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 A

Question 4

Limited liability companies are treated as artificial persons who can sue or be sued and enter into and enforce contracts.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Profits and losses from a Limited liability company (LLC) do not have to be distributed in the same proportion.

Accepted Answer

A) True 
 B)False

Question 7

A tortfeasor can be a member or a manager of an LLC.

Accepted Answer

A) True 
 B)False

Question 8

In states where an LLC may be organized by only one member, ________ can obtain the benefit of the limited liability shield of an LLC.

Accepted Answer

A)  corporations 
B)  sole proprietors 
C)  LLPs (limited liability partnerships) 
D)  general partnerships 
A)  corporations 
B)  sole proprietors 
C)  LLPs (limited liability partnerships) 
D)  general partnerships

Question 9

Limited liability companies are created by federal law.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

In a member-managed LLC, each member has

Question 11

The ________ is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs (limited liability companies).

Accepted Answer

A)  Williams Act 
B)  Securities Exchange Act 
C)  Uniform Limited Liability Company Act 
D)  Uniform Limited Partnership Act 
A)  Williams Act 
B)  Securities Exchange Act 
C)  Uniform Limited Liability Company Act 
D)  Uniform Limited Partnership Act

Question 12

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 13

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

Question 14

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 15

John, Nathan, and Julio form JNJ, LLC 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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Limited liability partners in an LLP can lose only their capital contribution if the partnership fails.

Accepted Answer

A) True 
 B)False

Question 18

A member's distributional interest in an LLC is ________ and may be transferred in whole or in part.

Accepted Answer

A)  a vote 
B)  a proxy 
C)  personal property 
D)  an authority in management 
A)  a vote 
B)  a proxy 
C)  personal property 
D)  an authority in management

Question 19

The Uniform Limited Liability Company Act is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of limited liability companies.

Accepted Answer

A) True 
 B)False

Question 20

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

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

Exam 39: Limited Liability Companies and Limited Liability Partnerships

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

Which of the following is true of capital contribution to an LLC (limited liability company)?

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

Limited liability companies are treated as artificial persons who can sue or be sued and enter into and enforce contracts.

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

Profits and losses from a Limited liability company (LLC) do not have to be distributed in the same proportion.

A tortfeasor can be a member or a manager of an LLC.

In states where an LLC may be organized by only one member, ________ can obtain the benefit of the limited liability shield of an LLC.

Limited liability companies are created by federal law.

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

The ________ is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs (limited liability companies).

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

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.

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

John, Nathan, and Julio form JNJ, LLC 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).

Limited liability partners in an LLP can lose only their capital contribution if the partnership fails.

A member's distributional interest in an LLC is ________ and may be transferred in whole or in part.

The Uniform Limited Liability Company Act is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of limited liability companies.

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

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