Question 1

An operating agreement is required for a limited liability company to exist, and it must be in writing.

Accepted Answer

A) True 
 B)False

Question 2

In most situations, with respect to a limited liability company's debts, the firm's members are shielded from

Accepted Answer

A)  all personal liability.
B)  no personal liability.
C)  the loss of their capital investment in the firm.
D)  liability for conduct that leads to a piercing of the "corporate veil."

Question 3

Because the activities of a partnership are more limited than the business of a joint venture, the members of a joint venture are presumed to have more power to bind their co-venturers.

Accepted Answer

A) True 
 B)False

Question 4

Singh, a member of Trucking LLC, ceases to be associated in the carrying on of the business of the firm. Despite the dissociation

Accepted Answer

A)  the member's duty of care continues with respect to prior events.
B)  the member's duty of loyalty continues until the firm dissolves.
C)  the member does not lose the right to participate in management.
D)  the member does not lose the right to act as an agent for the firm.

Question 5

Organizing as a limited liability company prevents the firm from attracting foreign investors.

Accepted Answer

A) True 
 B)False

Question 6

As in a partnership, a limited liability company may pay no taxes-profits can be passed through to the members, who pay personal taxes on the profits.

Accepted Answer

A) True 
 B)False

Question 7

To form a limited liability company, articles of organization must be filed with an attorney's office.

Accepted Answer

A) True 
 B)False

Question 8

A limited liability company that wants to distribute profits to its members could avoid "double taxation" by electing to be taxed as

Accepted Answer

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

Question 9

A cooperative can be incorporated.

Accepted Answer

A) True 
 B)False

Question 10

Grape Vineyards LLC, the members of which include Howie and Ilya, can hold title to property because as a limited liability company the firm is

Accepted Answer

A)  the sum of its members.
B)  a non-entity
C)  a legal person.
D)  a holding company.

Question 11

A limited liability company that operates in more than one state may not receive consistent treatment. This is because, according to the principle that in most states determines the law that applies to a foreign limited liability company, one state's courts must

Accepted Answer

A)  interpret and apply another state's laws.
B)  strictly apply its own jurisprudence.
C)  arrive at a consensus between sometimes conflicting rules.
D)  equitably balance the different state laws.

Question 12

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

Accepted Answer

A)  as an aggregate of its owners.
B)  only through its owners
C)  as a legal entity apart from its owners.
D)  only in conjunction with its owners.

Question 13

Leon, Michael, Nolan, and O'Neill join together to buy a professional basketball franchise. Their selected form of business organization is an investment group, which is also known as

Accepted Answer

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

Question 14

Unlike a sole proprietorship or a partnership, a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.

Accepted Answer

A) True 
 B)False

Question 15

Data Analytics LLC is a limited liability company. Unless the firm's articles of organization specify otherwise, it will most likely be assumed that the firm is

Accepted Answer

A)  member-managed.
B)  manager-managed.
C)  an aggregate of member and non-member managers.
D)  run by an outside professional management group.

Question 16

Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad. For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as

Accepted Answer

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

Question 17

A group of consumers form Grocers Mart Cooperative. This form of business organization makes it possible for these consumers to

Accepted Answer

A)  avoid personal liability for the acts of the cooperative.
B)  obtain an exemption from the state laws governing corporations.
C)  pay no taxes on their business income.
D)  pool their resources to gain an advantage in the marketplace.

Question 18

Paving LLC is a foreign limited liability company in the state of Ohio. In dealing with Paving, Ohio will apply the law of the state where the firm

Accepted Answer

A)  was formed.
B)  is headquartered.
C)  does business.
D)  will receive consistent treatment.

Question 19

Loren, Marie, and Nina form a syndicate to buy a professional soccer franchise. This syndicate could be set up as

Accepted Answer

A)  a joint venture.
B)  a corporation.
C)  a sole proprietorship.
D)  a limited liability company.

Question 20

If the members of a limited liability company do not stipulate in their operating agreement how voting rights will be apportioned, in most states, only the member-managers will be entitled to vote.

Accepted Answer

A) True 
 B)False

Exam 36: Limited Liability Companies and Special Business Forms

Organizing as a limited liability company prevents the firm from attracting foreign investors.

Correct AnswerverifiedShow Answer

Unlike a sole proprietorship or a partnership, a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.

Correct AnswerverifiedShow Answer

A cooperative can be incorporated.

Correct AnswerverifiedShow Answer

Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad. For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as

Correct AnswerverifiedShow Answer

Loren, Marie, and Nina form a syndicate to buy a professional soccer franchise. This syndicate could be set up as

Correct AnswerverifiedShow Answer

An operating agreement is required for a limited liability company to exist, and it must be in writing.

Correct AnswerverifiedShow Answer

Grape Vineyards LLC, the members of which include Howie and Ilya, can hold title to property because as a limited liability company the firm is

Correct AnswerverifiedShow Answer

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

Correct AnswerverifiedShow Answer

Because the activities of a partnership are more limited than the business of a joint venture, the members of a joint venture are presumed to have more power to bind their co-venturers.

Correct AnswerverifiedShow Answer

Paving LLC is a foreign limited liability company in the state of Ohio. In dealing with Paving, Ohio will apply the law of the state where the firm

Correct AnswerverifiedShow Answer

In most situations, with respect to a limited liability company's debts, the firm's members are shielded from

Correct AnswerverifiedShow Answer

A group of consumers form Grocers Mart Cooperative. This form of business organization makes it possible for these consumers to

Correct AnswerverifiedShow Answer

A limited liability company that wants to distribute profits to its members could avoid "double taxation" by electing to be taxed as

Correct AnswerverifiedShow Answer

As in a partnership, a limited liability company may pay no taxes-profits can be passed through to the members, who pay personal taxes on the profits.

Correct AnswerverifiedShow Answer

Singh, a member of Trucking LLC, ceases to be associated in the carrying on of the business of the firm. Despite the dissociation

Correct AnswerverifiedShow Answer

Data Analytics LLC is a limited liability company. Unless the firm's articles of organization specify otherwise, it will most likely be assumed that the firm is

Correct AnswerverifiedShow Answer

If the members of a limited liability company do not stipulate in their operating agreement how voting rights will be apportioned, in most states, only the member-managers will be entitled to vote.

Correct AnswerverifiedShow Answer

To form a limited liability company, articles of organization must be filed with an attorney's office.

Correct AnswerverifiedShow Answer

A limited liability company that operates in more than one state may not receive consistent treatment. This is because, according to the principle that in most states determines the law that applies to a foreign limited liability company, one state's courts must

Correct AnswerverifiedShow Answer

Leon, Michael, Nolan, and O'Neill join together to buy a professional basketball franchise. Their selected form of business organization is an investment group, which is also known as

Correct AnswerverifiedShow Answer

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