Question 1

What is a distributional interest? Explain the terms of its transfer.

Accepted Answer

A member's ownership interest in an LLC

Question 2

Peter, Preston, and Penny organize an LLC in the month of January. While composing the operating agreement, they forget to include the amendment clause. Six months later, the situation demands an amendment to the operating agreement. Which of the following would best apply in this scenario?

Accepted Answer

A)  The operating agreement can be amended if all three members approve. 
B)  The operating agreement cannot be amended as it contains no amendment provision. 
C)  The operating agreement can be amended with the affirmative majority of all shareholders. 
D)  The operating agreement can be amended only 60 days after a new amendment provision is included. 
A)  The operating agreement can be amended if all three members approve. 
B)  The operating agreement cannot be amended as it contains no amendment provision. 
C)  The operating agreement can be amended with the affirmative majority of all shareholders. 
D)  The operating agreement can be amended only 60 days after a new amendment provision is included.

Question 3

An operating agreement can be amended orally.

Accepted Answer

A) True 
 B)False

Question 4

A limited liability company cannot be abbreviated as LC.

Accepted Answer

A) True 
 B)False

Question 5

An LLP that wants to do business in states in other states must register as a(n) ________.

Accepted Answer

A)  at-will LLC 
B)  foreign LLC 
C)  LLC 
D)  foreign LLP 
A)  at-will LLC 
B)  foreign LLC 
C)  LLC 
D)  foreign LLP

Question 6

The duty of care for managers and members includes the duty not to usurp the LLC's (limited liability company's) opportunities.

Accepted Answer

A) True 
 B)False

Question 7

________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of a limited liability partnership to form the LLP.

Accepted Answer

A)  Articles of LLP 
B)  Agreements of conversion 
C)  Articles of organization of LLP 
D)  Articles of amendment of LLC (limited liability company) 
A)  Articles of LLP 
B)  Agreements of conversion 
C)  Articles of organization of LLP 
D)  Articles of amendment of LLC (limited liability company)

Question 8

An limited liability company that is organized in Alabama and is operating in Texas with no operations outside the United States is considered a ________ in Texas.

Accepted Answer

A)  foreign limited liability company 
B)  limited liability partnership 
C)  domestic limited liability company 
D)  general partnership 
A)  foreign limited liability company 
B)  limited liability partnership 
C)  domestic limited liability company 
D)  general partnership

Question 9

Which of the following best defines the duty of care to which a member of a member-managed LLC must adhere?

Accepted Answer

A)  the duty of not engaging in a known violation of law 
B)  the duty of not usurping an opportunity of the LLC 
C)  the duty of not competing with the LLC's business 
D)  the duty of not engaging in undisclosed self-dealing 
A)  the duty of not engaging in a known violation of law 
B)  the duty of not usurping an opportunity of the LLC 
C)  the duty of not competing with the LLC's business 
D)  the duty of not engaging in undisclosed self-dealing

Question 10

A limited liability partnership has no general partner.

Accepted Answer

A) True 
 B)False

Question 11

A limited liability company is taxed at the entity level.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Agents of an LLC are not permitted to enter into contracts on behalf of the LLC.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following methods are used to appoint a manager of a manager-managed LLC?

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 15

The United States does not permit an LLC to be member-managed.

Accepted Answer

A) True 
 B)False

Question 16

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 sole proprietorships. 
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 sole proprietorships.

Question 17

A member's obligation to contribute capital is excused by the member's death.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Which of the following is true of compensation offered by an LLC?

Accepted Answer

A)  Managers of an LLC are entitled to compensation and not benefits. 
B)  Members are not entitled to compensation for their services toward the LLC. 
C)  Members are not indemnified for liabilities in the ordinary course of business. 
D)  A nonmember manager of an LLC is not entitled to compensation. 
A)  Managers of an LLC are entitled to compensation and not benefits. 
B)  Members are not entitled to compensation for their services toward the LLC. 
C)  Members are not indemnified for liabilities in the ordinary course of business. 
D)  A nonmember manager of an LLC is not entitled to compensation.

Question 20

A limited liability company is an incorporated business entity.

Accepted Answer

A) True 
 B)False

Exam 39: Limited Liability Companies and Limited Liability Partnerships

What is a distributional interest? Explain the terms of its transfer.

Peter, Preston, and Penny organize an LLC in the month of January. While composing the operating agreement, they forget to include the amendment clause. Six months later, the situation demands an amendment to the operating agreement. Which of the following would best apply in this scenario?

An operating agreement can be amended orally.

A limited liability company cannot be abbreviated as LC.

An LLP that wants to do business in states in other states must register as a(n) ________.

The duty of care for managers and members includes the duty not to usurp the LLC's (limited liability company's) opportunities.

________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of a limited liability partnership to form the LLP.

An limited liability company that is organized in Alabama and is operating in Texas with no operations outside the United States is considered a ________ in Texas.

Which of the following best defines the duty of care to which a member of a member-managed LLC must adhere?

A limited liability partnership has no general partner.

A limited liability company is taxed at the entity level.

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

Agents of an LLC are not permitted to enter into contracts on behalf of the LLC.

Which of the following methods are used to appoint a manager of a manager-managed LLC?

The United States does not permit an LLC to be member-managed.

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

A member's obligation to contribute capital is excused by the member's death.

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

Which of the following is true of compensation offered by an LLC?

A limited liability company is an incorporated business entity.

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

Filters