Question 1

Jess and Keri are members of Livewire LLC, a limited liability company. In most situations, with respect to Livewire's debts, Jess and Keri are shielded from

Accepted Answer

A)   ​all liability.
B)   ​no liability.
C)   ​personal liability.
D)   ​"corporate veil" liability.

Question 2

Floyd and other 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 state laws governing corporations.
C)   ​pay no taxes on their business income.
D)   ​pool their resources to gain an advantage in the marketplace.

Question 3

Limited liability companies (LLCs) are governed by federal LLC statutes.

Accepted Answer

A) True 
 B)False  False

Question 4

Phone Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by

Accepted Answer

A)   ​the applicable state LLC statute.
B)   ​the Uniform Limited Liability Company Act.
C)   ​the principles of partnership law.
D)   ​the federal LLC statutes.

Question 5

Generally, a dissociated member of a limited liability company (LLC) has the right to buy his or her interest in the LLC from the other members.

Accepted Answer

A) True 
 B)False

Question 6

Global Shipping Corporation and Harbor Warehouse Company transfer their property to Investment Managers, Inc., which manages the property and distributes the profits to the beneficiaries. This form of business organization is

Accepted Answer

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

Question 7

Rollo is a member of Smooth Operators LLC, a limousine service. Rollo's relationship to Smooth Operators ends, but the firm continues to do business. This is​

Accepted Answer

A)   ​dissociation.
B)   ​dissolution.
C)   ​a violation of the law.
D)   ​unethical but not a violation of the law.

Question 8

​Generally, if a member dissociates form a limited liability company (LLC), the other members cannot continue to carry on the LLC's business.

Accepted Answer

A) True 
 B)False  False

Question 9

​Rural Development Company and Suburban Real Estate Corporation form a joint stock company. A joint stock company can be formed for, at the most,

Accepted Answer

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

Question 10

GMO Grain Corporation and Hybrid Yields, Inc., form a joint stock company. The ownership of a joint stock company is represented by

Accepted Answer

A)   ​partnership certificates.
B)   ​shares of stock.
C)   ​title documents.
D)   ​trust certificates.

Question 11

Limited liability company operating agreements can provide whether formal members' meetings will be held.

Accepted Answer

A) True 
 B)False  True

Question 12

A joint venture is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 13

Tax Accounting, LLC, is a member-managed limited liability company. If the law in Tax Accounting's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to

Accepted Answer

A)   ​capital contributions.
B)   ​participation in management.
C)   ​the number of members.
D)   ​members' seniority.

Question 14

Gail is the beneficiary of a business trust. As a beneficiary, she is required to

Accepted Answer

A)   ​distribute the trust's profits.
B)   ​assume responsibility for the trust's debts.
C)   ​draft a written trust agreement.
D)   ​none of the choices.

Question 15

The alter-ego theory cannot be applied to a limited liability company.

Accepted Answer

A) True 
 B)False

Question 16

Data Analytics, LLC, is a limited liability company. Unless the 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 17

Valu Food Markets is an incorporated cooperative. Like other incorporated cooperatives, Valu Food distributes profits to its owners on the basis of

Accepted Answer

A)   the amount of capital they contribute.​
B)   ​the degree to which they participate in management.
C)   ​their transactions with the cooperative.
D)   ​the requirements of the state in which it was incorporated.

Question 18

Every limited liability company is a citizen of every state.

Accepted Answer

A) True 
 B)False

Question 19

Farm & Ranch is an unincorporated cooperative. Unincorporated cooperatives are often treated like

Accepted Answer

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

Question 20

Michel is a citizen of France. With respect to a limited liability company in the United States, Michel can

Accepted Answer

A)   ​act as a creditor, but cannot otherwise invest or participate.
B)   ​become a member.
C)   ​not become a member, but can participate in its operations.
D)   ​not become a member or otherwise participate in its operations.

Exam 38: Limited Liability Companies and Special Business Forms

Jess and Keri are members of Livewire LLC, a limited liability company. In most situations, with respect to Livewire's debts, Jess and Keri are shielded from

Correct AnswerverifiedShow Answer

Floyd and other consumers form Grocers Mart Cooperative. This form of business organization makes it possible for these consumers to

Correct AnswerverifiedShow Answer

Limited liability companies (LLCs) are governed by federal LLC statutes.

Correct AnswerverifiedFalse

Phone Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by

Correct AnswerverifiedShow Answer

Generally, a dissociated member of a limited liability company (LLC) has the right to buy his or her interest in the LLC from the other members.

Correct AnswerverifiedShow Answer

Global Shipping Corporation and Harbor Warehouse Company transfer their property to Investment Managers, Inc., which manages the property and distributes the profits to the beneficiaries. This form of business organization is

Correct AnswerverifiedShow Answer

Rollo is a member of Smooth Operators LLC, a limousine service. Rollo's relationship to Smooth Operators ends, but the firm continues to do business. This is​

Correct AnswerverifiedShow Answer

​Generally, if a member dissociates form a limited liability company (LLC), the other members cannot continue to carry on the LLC's business.

Correct AnswerverifiedFalse

​Rural Development Company and Suburban Real Estate Corporation form a joint stock company. A joint stock company can be formed for, at the most,

Correct AnswerverifiedShow Answer

GMO Grain Corporation and Hybrid Yields, Inc., form a joint stock company. The ownership of a joint stock company is represented by

Correct AnswerverifiedShow Answer

Limited liability company operating agreements can provide whether formal members' meetings will be held.

Correct AnswerverifiedTrue

A joint venture is taxed like a corporation.

Correct AnswerverifiedShow Answer

Tax Accounting, LLC, is a member-managed limited liability company. If the law in Tax Accounting's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to

Correct AnswerverifiedShow Answer

Gail is the beneficiary of a business trust. As a beneficiary, she is required to

Correct AnswerverifiedShow Answer

The alter-ego theory cannot be applied to a limited liability company.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Valu Food Markets is an incorporated cooperative. Like other incorporated cooperatives, Valu Food distributes profits to its owners on the basis of

Correct AnswerverifiedShow Answer

Every limited liability company is a citizen of every state.

Correct AnswerverifiedShow Answer

Farm & Ranch is an unincorporated cooperative. Unincorporated cooperatives are often treated like

Correct AnswerverifiedShow Answer

Michel is a citizen of France. With respect to a limited liability company in the United States, Michel can

Correct AnswerverifiedShow Answer

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False

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Rollo is a member of Smooth Operators LLC, a limousine service. Rollo's relationship to Smooth Operators ends, but the firm continues to do business. This is

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Generally, if a member dissociates form a limited liability company (LLC), the other members cannot continue to carry on the LLC's business.

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False

Rural Development Company and Suburban Real Estate Corporation form a joint stock company. A joint stock company can be formed for, at the most,

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True

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