Question 1

A(n) ________ LLC has no 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 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

Which of the following actions requires voting by all members in a manager-managed LLC?

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 5

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 6

LLPs enjoy the flow-through tax benefit of other types of partnerships.

Accepted Answer

A) True 
 B)False

Question 7

The disassociation of a member from a term LLC before the expiration of the specified term is wrongful.

Accepted Answer

A) True 
 B)False

Question 8

An LLC is not liable for injury caused by an LLC member while acting within the ordinary course of business of the LLC.

Accepted Answer

A) True 
 B)False

Question 9

Members of an LLC have ________ liability.

Accepted Answer

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

Question 10

________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of an 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 11

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

Accepted Answer

A)  Each member has equal rights in the management of the business of the LLC. 
B)  The member with the highest capital contribution becomes the de facto manager of the LLC. 
C)  Any matter relating to the business of the LLC is decided by a unanimous vote of the members. 
D)  Shareholders are not allowed to decide matters relating to the business of the LLC. 
A)  Each member has equal rights in the management of the business of the LLC. 
B)  The member with the highest capital contribution becomes the de facto manager of the LLC. 
C)  Any matter relating to the business of the LLC is decided by a unanimous vote of the members. 
D)  Shareholders are not allowed to decide matters relating to the business of the LLC.

Question 12

In a manager-managed LLC, amending the articles of organization cannot be delegated to the managers.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

An LLC 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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Members of LLCs (limited liability companies) are not personally liable for the LLCs' debts, obligations, and liabilities.

Accepted Answer

A) True 
 B)False

Question 18

A nonmanager member of an LLC is not entitled to remuneration for services performed for the LLC at any time.

Accepted Answer

A) True 
 B)False

Question 19

A member of a manager-managed LLC 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 20

An operating agreement is a document that states the terms for converting an existing business to a limited liability company.

Accepted Answer

A) True 
 B)False

Exam 39: Limited Liability Companies and Limited Liability Partnerships

A(n) ________ LLC has no specified term of duration.

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

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

Which of the following actions requires voting by all members in a manager-managed LLC?

Which of the following best defines the term distributional interest?

LLPs enjoy the flow-through tax benefit of other types of partnerships.

The disassociation of a member from a term LLC before the expiration of the specified term is wrongful.

An LLC is not liable for injury caused by an LLC member while acting within the ordinary course of business of the LLC.

Members of an LLC have ________ liability.

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

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

In a manager-managed LLC, amending the articles of organization cannot be delegated to the managers.

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

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

An LLC is a ________ in the state in which it is organized.

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

Members of LLCs (limited liability companies) are not personally liable for the LLCs' debts, obligations, and liabilities.

A nonmanager member of an LLC is not entitled to remuneration for services performed for the LLC at any time.

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

An operating agreement is a document that states the terms for converting an existing business to a limited liability company.

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