Question 1

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

Accepted Answer

A)  An LLC is a creature of federal law. 
B)  An LLC is regarded a separate legal entity. 
C)  An LLC cannot hold title to property. 
D)  The owners of an LLC are called general partners or specific partners. 
A)  An LLC is a creature of federal law. 
B)  An LLC is regarded a separate legal entity. 
C)  An LLC cannot hold title to property. 
D)  The owners of an LLC are called general partners or specific partners.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Sam Muller and Toby Richardson organize an LLC in the state of Delaware. In the articles of organization, they specify the duration of the LLC as 25 years from the date of filing the articles of organization. Which of the following is true in this context?

Accepted Answer

A)  The LLC is invalid as it does not specify a date of termination. 
B)  The LLC may be dissolved at will any time after 25 years from the date of filing the articles of organization. 
C)  Muller and Richardson have organized a valid term LLC. 
D)  Muller and Richardson have organized an at-will LLC. 
A)  The LLC is invalid as it does not specify a date of termination. 
B)  The LLC may be dissolved at will any time after 25 years from the date of filing the articles of organization. 
C)  Muller and Richardson have organized a valid term LLC. 
D)  Muller and Richardson have organized an at-will LLC.

Question 4

Explain the process that exempts members of an LLC from double taxation.

Accepted Answer

Under the Internal Revenue Code and regu

Question 5

Which of the following is true of a manager-managed LLC?

Accepted Answer

A)  Each member has equal rights in the management of the LLC. 
B)  Members designate a manager or managers to manage the LLC. 
C)  A designated manager or managers have little authority to manage the LLC. 
D)  Members have the right to manager the LLC. 
A)  Each member has equal rights in the management of the LLC. 
B)  Members designate a manager or managers to manage the LLC. 
C)  A designated manager or managers have little authority to manage the LLC. 
D)  Members have the right to manager the LLC.

Question 6

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

Question 7

In which of the following cases does the conversion of an existing business to an LLC take effect?

Accepted Answer

A)  when the articles of organization are filed with the secretary of state 
B)  when the members enter into an agreement of conversion 
C)  when an operating agreement is finalized by the members 
D)  when the first certificate of interest is issued 
A)  when the articles of organization are filed with the secretary of state 
B)  when the members enter into an agreement of conversion 
C)  when an operating agreement is finalized by the members 
D)  when the first certificate of interest is issued

Question 8

If a member or manager of an LLC is found to be a tortfeasor, he or she is not personally liable for the injury or death.

Accepted Answer

A) True 
 B)False

Question 9

The Uniform Limited Liability Company Act (ULLCA) is a federal law and is valid across the United States.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Which of the following is true of profits and losses of an LLC whose operating agreement does not contain profit or loss sharing clauses?

Accepted Answer

A)  A member who invests 10 percent capital must bear 10 percent of the losses. 
B)  A member who invests 30 percent of the capital receives 30 percent of the profit. 
C)  A member who invests 40 percent of the capital receives 20 percent of the profit. 
D)  All members receive equal shares in profits regardless of the capital contributed. 
A)  A member who invests 10 percent capital must bear 10 percent of the losses. 
B)  A member who invests 30 percent of the capital receives 30 percent of the profit. 
C)  A member who invests 40 percent of the capital receives 20 percent of the profit. 
D)  All members receive equal shares in profits regardless of the capital contributed.

Question 12

An LLP is a domestic LLP ________.

Accepted Answer

A)  in the state in which the LLP is organized 
B)  in every state in the United States 
C)  in the state in which it does the majority of its business 
D)  in all states in which it does business 
A)  in the state in which the LLP is organized 
B)  in every state in the United States 
C)  in the state in which it does the majority of its business 
D)  in all states in which it does business

Question 13

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 14

A member or a shareholder is the owner of a limited liability company.

Accepted Answer

A) True 
 B)False

Question 15

The certificate of interest acts the same as a(n) ________ issued by a corporation.

Accepted Answer

A)  promissory note 
B)  stock certificate 
C)  deposit note 
D)  initial public offer 
A)  promissory note 
B)  stock certificate 
C)  deposit note 
D)  initial public offer

Question 16

________ is a duty owed by a member of a limited liability company to not act adversely to the interests of the LLC.

Accepted Answer

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

Question 17

The Uniform Limited Liability Company Act offers which of the following types of LLC organizations?

Accepted Answer

A)  LLCs and LLPs 
B)  member-managed and manager-managed 
C)  member-managed and member-only 
D)  limited liability partners and limited liability members 
A)  LLCs and LLPs 
B)  member-managed and manager-managed 
C)  member-managed and member-only 
D)  limited liability partners and limited liability members

Question 18

Philip and Deborah form an LLC . Philip contributes $50,000 capital, and Deborah contributes $75,000 capital. They do not have an agreement as to how profits are to be shared. If the LLC makes a $100,000 profit in its first year, how will the profit be divided among the members?

Accepted Answer

A)  Philip gets $30,000, and Deborah gets $70,000. 
B)  Philip gets $50,000, and Deborah gets $50,000. 
C)  Philip gets $25,000, and Deborah gets $75,000. 
D)  Philip gets $35,000, and Deborah gets $65,000. 
A)  Philip gets $30,000, and Deborah gets $70,000. 
B)  Philip gets $50,000, and Deborah gets $50,000. 
C)  Philip gets $25,000, and Deborah gets $75,000. 
D)  Philip gets $35,000, and Deborah gets $65,000.

Question 19

Distinguish between rightful and wrongful disassociation from an LLC. What are the consequences of disassociation?

Accepted Answer

Unless an LLC's operating agreement prov

Question 20

Which of the following is true of a 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

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

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

Sam Muller and Toby Richardson organize an LLC in the state of Delaware. In the articles of organization, they specify the duration of the LLC as 25 years from the date of filing the articles of organization. Which of the following is true in this context?

Explain the process that exempts members of an LLC from double taxation.

Which of the following is true of a manager-managed LLC?

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

In which of the following cases does the conversion of an existing business to an LLC take effect?

If a member or manager of an LLC is found to be a tortfeasor, he or she is not personally liable for the injury or death.

The Uniform Limited Liability Company Act (ULLCA) is a federal law and is valid across the United States.

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

Which of the following is true of profits and losses of an LLC whose operating agreement does not contain profit or loss sharing clauses?

An LLP is a domestic LLP ________.

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

A member or a shareholder is the owner of a limited liability company.

The certificate of interest acts the same as a(n) ________ issued by a corporation.

________ is a duty owed by a member of a limited liability company to not act adversely to the interests of the LLC.

The Uniform Limited Liability Company Act offers which of the following types of LLC organizations?

Philip and Deborah form an LLC . Philip contributes $50,000 capital, and Deborah contributes $75,000 capital. They do not have an agreement as to how profits are to be shared. If the LLC makes a $100,000 profit in its first year, how will the profit be divided among the members?

Distinguish between rightful and wrongful disassociation from an LLC. What are the consequences of disassociation?

Which of the following is true of a limited liability company formation?

Legal Heritage and the Digital Age

Courts and Jurisdiction

Judicial, Alternative, and E-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

Franchise and Special Forms of Business

Investor Protection and E-Securities Transactions

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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