Question 1

Accountants,lawyers,and doctors are among the professionals allowed to create a limited liability partnership.

Accepted Answer

A) True 
 B)False

Question 2

Where a disassociating member of an LLC is entitled to payment for her interest,she is entitled to fair market value even if the operating agreement provides otherwise.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about operating agreements for LLCs?

Accepted Answer

A)   All LLCs must have them,but they need not be filed.
B)   They must be in writing in order to be enforceable.
C)   All LLCs must have one,and they must be filed with the articles of organization.
D)   Member-managed LLCs must have one,but they are not required for manager-managed LLCs.
E)   They are not required,but are recommended.F) None of the above
G) B) and E)

Question 4

Maria is one of six members of a limited liability company.This is a manager-managed LLC,with two of the members named as managers.Maria and Vanessa,one of the managers,executed a personal guarantee (both their names on one guarantee)for a bank loan to the LLC.Although the LLC was successful for a couple of years,its debts now greatly exceed its assets and the members are considering liquidation.Discuss Maria's liability.

Accepted Answer

As a member of an LLC,Maria has limited ...

Question 5

The authority for the formation of LLCs comes from:

Accepted Answer

A)   state statutes
B)   federal statutes
C)   federal administrative regulations
D)   federal court decisions
E)   state court decisionsF) A) and D)
G) A) and E)

Question 6

When choosing the form of business organization that a business will use,what additional factors should be considered if the business will be doing substantial business with entities in other nations?

Accepted Answer

One factor is under what circumstances t...

Question 7

Which of the following is not required to be set forth in an LLC's articles of organization?

Accepted Answer

A)   the name and address of the LLC's agent for service of process
B)   the name and address of each organizer
C)   the process by which managers of the LLC are designated
D)   whether the LLC is a term LLC
E)   whether one or more of the members will be personally liable for the debts and obligations of the LLCF) B) and D)
G) C) and D)

Question 8

Non-manager members in a manager-managed LLC can bind the LLC to contracts.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true about selection of a name under which to operate an LLC?

Accepted Answer

A)   The name must indicate that the company is an LLC.
B)   The LLC can use trademarked names so long as the trademark is not being used by another LLC.
C)   A name cannot be reserved until the LLC has come into existence.
D)   A non-trademarked name that is similar to a name used by another business may not be used.
E)   A and D onlyF) A) and B)
G) A) and C)

Question 10

Members who are not managers of a manager-managed LLC still have rights to manage the LLC regardless of the operating agreement.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a reason to form a limited liability company rather than an S corporation?

Accepted Answer

A)   There is no limit on the number of owners of a limited liability company,whereas the number of shareholders of an S corporation is limited.
B)   All owners of a limited liability company have limited liability,but not all owners of an S corporation have limited liability.
C)   A limited liability company can be formed without formalities such as filing papers with the state,whereas an S corporation requires papers to be filed with the state.
D)   A limited liability company acts as a flow-through entity for income tax purposes,but an S corporation does not.E) All of the above
F) None of the above

Question 12

Thelma and Louise form an LLC for the purpose of operating road trip tours of the American southwest.In the articles of organization,they state,"the term of this limited liability company shall last until our travel company has operated 20 successful tours,at which point the term of this company shall end." Thelma and Louise have formed:

Accepted Answer

A)   a term LLC because it has a set ending date
B)   a term LLC because all LLCs are set to terminate,even though many are set to terminate far in the future
C)   a term LLC because the event that terminates the LLC is reasonably able to be accomplished as of the time that the LLC is formed
D)   an at-will LLC because there is no specified time for the termination of the LLC
E)   an at-will LLC because any mention of an uncertain event in connection with the duration of an LLC causes the LLC to be at-willF) A) and B)
G) A) and C)

Question 13

If a member disassociates him or herself from an at-will LLC,the LLC must only purchase the disassociating member's distributional interest on the expiration of the specified term of the LLC.

Accepted Answer

A) True 
 B)False

Question 14

Mary was an architect and was one of four members who joined an LLC that was going to develop a large new residential subdivision over the next several years.Mary agreed that as part of her contribution of capital she would contribute $100,000 and would provide 300 hours of time working on the architectural design of homes to be built by the LLC.Unfortunately,as Mary was out enjoying a walk one day,a driver in a sport utility vehicle was talking on a cell phone and struck Mary,killing her.When she was killed,Mary had paid $60,000 of her cash contribution and had already provided 240 hours of the design services.In these circumstances:

Accepted Answer

A)   Mary's death discharges any unperformed obligation to contribute capital in the form of services,but her estate would be obligated for the unpaid $40,000.
B)   Mary's death discharges any obligation to contribute capital in either cash or services.
C)   Mary's death discharges neither obligation. Her estate will be obligated to pay the $40,000 and the fair value of the unperformed architectural services.
D)   Mary's death would normally discharge neither of the obligations,but because the architectural services were based on Mary's particular skill and judgment,her estate is liable only for the unpaid cash contribution.
E)   Mary's death discharges neither obligation,but her estate is liable only if payment of the amounts does not create an undue hardship for any beneficiary of her estate.F) C) and D)
G) A) and B)

Question 15

Members may draft an agreement whereby the profits of an LLC are not to be shared equally.

Accepted Answer

A) True 
 B)False

Question 16

Dan,Fran,and Stan want to establish and operate a mountain bike sales and rental shop.Dan and Fran will be actively involved in the management of the business,but Stan is investing most of the money.The three of them do not want to form a corporation,but want to use a form of business,if possible,that will give limited liability to each of them.Which of the following is true?

Accepted Answer

A)   Because Dan and Fran will be actively managing the business,there is no form of business other than a corporation that will give them limited liability.
B)   They could form a limited liability company and this would give limited liability to each of the three owners.
C)   They could form a limited liability company and each have limited liability,but if they formed either a limited partnership or limited liability partnership,there would be at least one partner with unlimited liability.
D)   They could each have limited liability in a properly formed limited partnership,limited liability partnership,or limited liability company.E) C) and D)
F) B) and C)

Question 17

Which of the following is not true about limited liability companies under the Uniform Limited Liability Company Act?

Accepted Answer

A)   Limited liability companies can be formed with only one member.
B)   Limited liability companies can only be taxed as partnerships.
C)   A limited liability company must use the words "limited liability company" in its name or use "LLC" or "LC."
D)   In order to form a limited liability company,articles of organization must be filed with the state.E) B) and C)
F) B) and D)

Question 18

Lynda is a member of a manager-managed LLC but is not a manager.However,Lynda has considerable expertise in the business of the LLC.Lynda assisted the managers for the first couple of years of the LLC's existence without any difficulties.During the third year,Lynda began to challenge some of the decisions made by the managers who had begun to shut Lynda out of most decisions.Lynda demands that as a member of the LLC she be allowed to participate in its management and that she be compensated for the services she is providing.In this case:

Accepted Answer

A)   Lynda cannot demand a continued management role,but is entitled to compensation for the services already delivered.
B)   Lynda will be allowed to participate in management and is entitled to compensation.
C)   Lynda will be allowed to participate,but is not entitled to any compensation.
D)   Lynda is not entitled to participate in management,nor is she entitled to compensation.E) B) and C)
F) All of the above

Question 19

An LLC may own and transfer personal property.

Accepted Answer

A) True 
 B)False

Question 20

After disassociating from an LLC,a member retains apparent authority to bind the LLC:

Accepted Answer

A)   for 2 years to any party
B)   for 2 years to any party except those who know of the disassociation or who have received notice of it
C)   for a reasonable time to any party
D)   for a reasonable time to any party except those who have actual notice of the disassociation
E)   for 1 year to all partiesF) A) and B)
G) B) and E)

Exam 39: Limited Liability Companies and Limited Liability Partnerships

Which of the following is not true about limited liability companies under the Uniform Limited Liability Company Act?

Correct Answer
verified

After disassociating from an LLC,a member retains apparent authority to bind the LLC:

Correct Answer
verified

Which of the following is a reason to form a limited liability company rather than an S corporation?

Correct Answer
verified

If a member disassociates him or herself from an at-will LLC,the LLC must only purchase the disassociating member's distributional interest on the expiration of the specified term of the LLC.

Correct Answer
verified

Correct Answer
verified

Which of the following is true about selection of a name under which to operate an LLC?

Correct Answer
verified

Correct Answer
verified
As a member of an LLC,Maria has limited ...
View Answer

Where a disassociating member of an LLC is entitled to payment for her interest,she is entitled to fair market value even if the operating agreement provides otherwise.

Correct Answer
verified

Members who are not managers of a manager-managed LLC still have rights to manage the LLC regardless of the operating agreement.

Correct Answer
verified

When choosing the form of business organization that a business will use,what additional factors should be considered if the business will be doing substantial business with entities in other nations?

Correct Answer
verified
One factor is under what circumstances t...
View Answer

Which of the following is not required to be set forth in an LLC's articles of organization?

Correct Answer
verified

Correct Answer
verified

Members may draft an agreement whereby the profits of an LLC are not to be shared equally.

Correct Answer
verified

Which of the following is true about operating agreements for LLCs?

Correct Answer
verified

Accountants,lawyers,and doctors are among the professionals allowed to create a limited liability partnership.

Correct Answer
verified

An LLC may own and transfer personal property.

Correct Answer
verified

Correct Answer
verified

Non-manager members in a manager-managed LLC can bind the LLC to contracts.

Correct Answer
verified

Correct Answer
verified

The authority for the formation of LLCs comes from:

Correct Answer
verified

Exam 39: Limited Liability Companies and Limited Liability Partnerships

Which of the following is not true about limited liability companies under the Uniform Limited Liability Company Act?

Correct AnswerverifiedShow Answer

After disassociating from an LLC,a member retains apparent authority to bind the LLC:

Correct AnswerverifiedShow Answer

Which of the following is a reason to form a limited liability company rather than an S corporation?

Correct AnswerverifiedShow Answer

If a member disassociates him or herself from an at-will LLC,the LLC must only purchase the disassociating member's distributional interest on the expiration of the specified term of the LLC.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true about selection of a name under which to operate an LLC?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAs a member of an LLC,Maria has limited ...View AnswerShow Answer

Where a disassociating member of an LLC is entitled to payment for her interest,she is entitled to fair market value even if the operating agreement provides otherwise.

Correct AnswerverifiedShow Answer

Members who are not managers of a manager-managed LLC still have rights to manage the LLC regardless of the operating agreement.

Correct AnswerverifiedShow Answer

When choosing the form of business organization that a business will use,what additional factors should be considered if the business will be doing substantial business with entities in other nations?

Correct AnswerverifiedOne factor is under what circumstances t...View AnswerShow Answer

Which of the following is not required to be set forth in an LLC's articles of organization?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Members may draft an agreement whereby the profits of an LLC are not to be shared equally.

Correct AnswerverifiedShow Answer

Which of the following is true about operating agreements for LLCs?

Correct AnswerverifiedShow Answer

Accountants,lawyers,and doctors are among the professionals allowed to create a limited liability partnership.

Correct AnswerverifiedShow Answer

An LLC may own and transfer personal property.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Non-manager members in a manager-managed LLC can bind the LLC to contracts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The authority for the formation of LLCs comes from:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
As a member of an LLC,Maria has limited ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
One factor is under what circumstances t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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