Question 1

Dairy Products, Inc., and Eden Farms Corporation form a joint venture to make and test-market Frosty Ice Cream. A joint venture is usually formed for

Accepted Answer

A)  ​an implied duration of not more than six months. 
B)  ​a single transaction or project. 
C)  ​a stated duration of not more than one year. 
D)  a perpetual existence.​

Question 2

If a dispute arises and the applicable limited liability company statute does not cover the issue, a court will most likely dismiss the case.

Accepted Answer

A) True 
 B)False

Question 3

Foreign investors cannot participate in a limited liability company.

Accepted Answer

A) True 
 B)False

Question 4

Custom Auto, LLC, is a limited liability company. Its members include Dennis and Emma. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as

Accepted Answer

A)  ​a person. 
B)  ​a corporation. 
C)  ​a sole proprietorship. 
D)  ​a partnership.

Question 5

In a limited liability company, the management may consist of members or nonmembers, but not both.

Accepted Answer

A) True 
 B)False

Question 6

Dreem Land Corporation and Earthbound Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and Earthbound. This form of a business organization is

Accepted Answer

A)  ​a business trust. 
B)  ​a joint stock company. 
C)  ​a joint venture. 
D)  ​a syndicate.

Question 7

As the beneficiary of a business trust, Bob's liability for trust debts and obligations is

Accepted Answer

A)  ​limited to his capital investment in the trust. 
B)  ​limited to his personal assets. 
C)  ​nothing. 
D)  ​unlimited.

Question 8

Limited liability companies cannot enter into contracts or hold title to property.

Accepted Answer

A) True 
 B)False

Question 9

Orly's Adventure Travel and Paquito's Wild River Tours form a joint venture. Orly can participate in the venture's management to

Accepted Answer

A)  ​the extent that she assumes liability for the venture's debts. 
B)  ​the extent of her investment in the venture. 
C)  ​any extent. 
D)  ​no extent.

Question 10

A cooperative cannot be incorporated.

Accepted Answer

A) True 
 B)False

Question 11

Trans-Pacific Company and USA Export, Inc., form a business organization to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This organization is

Accepted Answer

A)  ​a business trust. 
B)  ​a joint stock company. 
C)  ​a joint venture. 
D)  ​a syndicate.

Question 12

Normally, a member who dissociates from a limited liability company (LLC) has the right to force the LLC to dissolve.

Accepted Answer

A) True 
 B)False

Question 13

The members of a joint venture have less implied and apparent authority than the partners in a partnership.

Accepted Answer

A) True 
 B)False

Question 14

Business Media, a partnership, publishes periodicals, including Cycle Review. DangerZoners, also a partnership, publishes Extreem Sportz. Business Media and DangerZoners agree to pool their resources in a one-time deal to print and market a book, Future Runs. In contracting with Geo Cache, Inc., for supplies to print the book, Business Media commits fraud. In contracting with Host Articles Agency for materials to use in Extreem Sportz, DangerZoners commits fraud. Geo Cache and Host Articles file suits against Business Media and DangerZoners. What type of business organization has Business Media and DangerZoners formed? To whom, if anyone, is Business Media liable? To whom, if anyone, is DangerZoners liable?

Accepted Answer

The answer of Business Media, a partnership, publishes periodicals, including...

Question 15

Rogue Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rogue files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to

Accepted Answer

A)  ​business trusts. 
B)  ​limited liability companies. 
C)  ​corporations. 
D)  ​partnerships.

Question 16

Beth and Carol want to form a limited liability company to manage their business, DoReMi Music. Their state has adopted the Uniform Limited Liability Company Act, which has been adopted in​

Accepted Answer

A)  ​all states. 
B)  ​no state. 
C)  ​less than one-fifth of the states. 
D)  ​about half of the states.

Question 17

In many states, an operating agreement is required for a limited liability company to exist.

Accepted Answer

A) True 
 B)False

Question 18

Bee Hive Honey, LLC's members include Charlie and Donna. For purposes of suing and being sued, Bee Hive Honey is

Accepted Answer

A)  ​an aggregate of its members. 
B)  ​a non-entity 
C)  ​a legal entity apart from its members. 
D)  ​a non-participating third party.

Question 19

Members of a limited liability company (LLC) can stipulate in their operating agreement how managers will be chosen or removed.

Accepted Answer

A) True 
 B)False

Question 20

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Accepted Answer

A)  ​a business trust. 
B)  ​a joint stock company. 
C)  ​a joint venture. 
D)  ​a syndicate.

Exam 38: Limited Liability Companies and Special Business Forms

Dairy Products, Inc., and Eden Farms Corporation form a joint venture to make and test-market Frosty Ice Cream. A joint venture is usually formed for

If a dispute arises and the applicable limited liability company statute does not cover the issue, a court will most likely dismiss the case.

Foreign investors cannot participate in a limited liability company.

Custom Auto, LLC, is a limited liability company. Its members include Dennis and Emma. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as

In a limited liability company, the management may consist of members or nonmembers, but not both.

Dreem Land Corporation and Earthbound Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and Earthbound. This form of a business organization is

As the beneficiary of a business trust, Bob's liability for trust debts and obligations is

Limited liability companies cannot enter into contracts or hold title to property.

Orly's Adventure Travel and Paquito's Wild River Tours form a joint venture. Orly can participate in the venture's management to

A cooperative cannot be incorporated.

Trans-Pacific Company and USA Export, Inc., form a business organization to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This organization is

Normally, a member who dissociates from a limited liability company (LLC) has the right to force the LLC to dissolve.

The members of a joint venture have less implied and apparent authority than the partners in a partnership.

Rogue Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rogue files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to

Beth and Carol want to form a limited liability company to manage their business, DoReMi Music. Their state has adopted the Uniform Limited Liability Company Act, which has been adopted in​

In many states, an operating agreement is required for a limited liability company to exist.

Bee Hive Honey, LLC's members include Charlie and Donna. For purposes of suing and being sued, Bee Hive Honey is

Members of a limited liability company (LLC) can stipulate in their operating agreement how managers will be chosen or removed.

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Beth and Carol want to form a limited liability company to manage their business, DoReMi Music. Their state has adopted the Uniform Limited Liability Company Act, which has been adopted in