Question 1

The Uniform Limited Liability Company Act (ULLCA)is not law unless a state adopts it as its LLC statute.

Accepted Answer

A) True 
 B)False

Question 2

________ are the documents that are filed with the secretary of state to wind up an LLC as of the date of filing or upon a later effective date specified in the articles.

Accepted Answer

A)  Articles of limited liability partnership 
B)  Articles of termination 
C)  Articles of amendment 
D)  Articles of organization

Question 3

Jeeves,the member of an LLC with three other members,injures a pedestrian while driving to work at a speed above the highway speed limit.Can the pedestrian sue the LLC for his negligence? Give reasons to support your answer.

Accepted Answer

The answer of Jeeves,the member of an LLC with three...

Question 4

An LLC differs from a sole proprietorship in that it ________.

Accepted Answer

A)  gives nonmanager members rights to manage a manager-managed LLC's business affairs 
B)  is less complex and costly to form than a sole proprietorship 
C)  can be owned by one owner in most states and can thus obtain limited liability 
D)  requires at least one member who is personally liable for the obligations of the partnership

Question 5

Chan,Yuvi,Betty,and Bob form a manager-managed LLC that sells antique commodities online.Yuvi and Bob are named managers of the LLC.Betty secretly starts a competing business to conduct online auctions over the Internet.Which of the following is true of the given scenario?

Accepted Answer

A)  All the members can be held liable for breaching their duty. 
B)  Betty is liable for breaching her duty of care to the LLC. 
C)  Betty is liable for breaching her duty of loyalty to the LLC. 
D)  Betty can compete with the LLC without any legal liability.

Question 6

Which of the following is true of operating an LLC?

Accepted Answer

A)  An LLC has to file a form with the IRS to obtain flow-through taxation. 
B)  An LLC can have any number of member-owners. 
C)  An LLC cannot have shareholders other than estates, certain trusts, and individuals. 
D)  An LLC cannot have nonresident alien member-owners.

Question 7

Which of the following refers to a limited liability company that has no specified term of duration?

Accepted Answer

A)  S corporation 
B)  C corporation 
C)  term LLC 
D)  at-will LLC

Question 8

A manager of a manager-managed LLC is appointed by ________.

Accepted Answer

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

Question 9

An LLC could not amend its operating agreement despite all the members of the LLC orally agreeing to the amendment.Why?

Accepted Answer

The answer of An LLC could not amend its operating...

Question 10

An LLC that was 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

Question 11

Samuel and his friends form an LLC.Samuel,through an agreement,promises to contribute a personal property to the LLC within a year of the LLC's operation.Samuel passes away in an accident a few days after signing the agreement.Will the agreement still hold? Give reasons in support of your answer.

Accepted Answer

The answer of Samuel and his friends form an LLC.Samuel,through...

Question 12

A term LLC may be continued as an at-will LLC by a simple majority vote of the members of the LLC.

Accepted Answer

A) True 
 B)False

Question 13

Noam,Amar,and Jonas,all doctors,form an LLP.A patient being treated by the LLP passes away due to negligence from Dr.Jonas.The LLP is sued for $5 million by the patient's relatives.Which of the following is true of the given situation?

Accepted Answer

A)  Dr. Jonas alone is personally liable to pay the whole amount. 
B)  Dr. Jonas alone is personally liable to the patient for an amount equal to his or her capital contribution. 
C)  All the three doctors are personally liable to pay the whole amount. 
D)  No legal action can be taken against the LLP or its partners.

Question 14

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.

Question 15

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

Accepted Answer

A)  Operating agreements 
B)  Certificates of interest 
C)  Articles of organization 
D)  Articles of amendment

Question 16

In a manager-managed LLC,who among the following has the authority to bind the LLC to contracts?

Accepted Answer

A)  the nonmanager members 
B)  the member whose capital contribution to the LLC is the highest 
C)  managers 
D)  shareholders

Question 17

What are the strengths of operating a business as an LLC?

Accepted Answer

The answer of What are the strengths of operating a...

Question 18

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

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

Question 19

What is distributional interest? A member of an LLC transfers his distributional interest to his brother.Will his brother be considered a member of the LLC? Give arguments in support of your answer.

Accepted Answer

The answer of What is distributional interest? A member of...

Question 20

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

Exam 30: Limited Liability Companies and Limited Liability Partnerships

The Uniform Limited Liability Company Act (ULLCA)is not law unless a state adopts it as its LLC statute.

________ are the documents that are filed with the secretary of state to wind up an LLC as of the date of filing or upon a later effective date specified in the articles.

Jeeves,the member of an LLC with three other members,injures a pedestrian while driving to work at a speed above the highway speed limit.Can the pedestrian sue the LLC for his negligence? Give reasons to support your answer.

An LLC differs from a sole proprietorship in that it ________.

Chan,Yuvi,Betty,and Bob form a manager-managed LLC that sells antique commodities online.Yuvi and Bob are named managers of the LLC.Betty secretly starts a competing business to conduct online auctions over the Internet.Which of the following is true of the given scenario?

Which of the following is true of operating an LLC?

Which of the following refers to a limited liability company that has no specified term of duration?

A manager of a manager-managed LLC is appointed by ________.

An LLC could not amend its operating agreement despite all the members of the LLC orally agreeing to the amendment.Why?

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

Samuel and his friends form an LLC.Samuel,through an agreement,promises to contribute a personal property to the LLC within a year of the LLC's operation.Samuel passes away in an accident a few days after signing the agreement.Will the agreement still hold? Give reasons in support of your answer.

A term LLC may be continued as an at-will LLC by a simple majority vote of the members of the LLC.

Noam,Amar,and Jonas,all doctors,form an LLP.A patient being treated by the LLP passes away due to negligence from Dr.Jonas.The LLP is sued for $5 million by the patient's relatives.Which of the following is true of the given situation?

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?

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

In a manager-managed LLC,who among the following has the authority to bind the LLC to contracts?

What are the strengths of operating a business as an LLC?

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

What is distributional interest? A member of an LLC transfers his distributional interest to his brother.Will his brother be considered a member of the LLC? Give arguments in support of your answer.

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.