Question 1

Mero, Nico, and Osaka want to form Pharma Sales LLC (limited liability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?

Accepted Answer

The provisions of a limited liability co...

Question 2

Del and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Del and Efron

Accepted Answer

A)   file a certificate of limited partnership.
B)   execute a partnership agreement.
C)   accept their first client.
D)   make their capital contributions.E) A) and D)
F) B) and D)

Question 3

In some states, limited partners cannot withdraw from a limited partnership.

Accepted Answer

A) True 
 B)False

Question 4

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.E) A) and B)
F) None of the above

Question 5

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."E) None of the above
F) B) and C)

Question 6

Jess, Kia, and Len form a partnership to design and test energy storage facilities and equipment. The liability of all partners is limited to the amount of their investments in the firm. This entity is most likely

Accepted Answer

A)   a limited liability partnership.
B)   a family limited liability partnership.
C)   none of the choices.
D)   a limited liability limited partnership.E) A) and D)
F) None of the above

Question 7

Because the basic formational structure is the same, it can be relatively easy to convert a general partnership into a limited liability partnership.

Accepted Answer

A) True 
 B)False

Question 8

Global Capital S.A. is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

Accepted Answer

A)   become a member, but cannot otherwise participate.
B)   become a member.
C)   not become a member, but can participate.
D)   not become a member or participate.E) A) and B)
F) A) and D)

Question 9

Jana and Kwan are partners in Lawyers LLP, a limited liability partnership. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with

Accepted Answer

A)   Jana and Milo.
B)   Jana.
C)   Milo.
D)   Jana and Kwan.E) A) and B)
F) A) and C)

Question 10

Maia, a limited partner in Nano Investors, consults with Odet, the firm's general partner, regarding partnership business. For this activity, Maia is

Accepted Answer

A)   exposed to personal liability for participating in the firm's management.
B)   required to dissociate from the business.
C)   prohibited from prospectively withdrawing from the partnership.
D)   none of the choices.E) A) and C)
F) A) and B)

Question 11

Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

Accepted Answer

A)   distributed according to members' proportionate ownership in the firm.
B)   divided equally among the members.
C)   forfeited to the state.
D)   reinvested in the business until the dispute is resolved.E) A) and B)
F) All of the above

Question 12

Hera, her daughter Inez, and other members of their family wish to operate their family-owned farm as a business organization with pass-through tax status, limits to the personal liability of the participants, and the option to transfer real estate among those parties exempt from real estate taxes. The appropriate business organization for this enterprise is most likely

Accepted Answer

A)   a limited liability partnership.
B)   a family limited liability partnership.
C)   none of the choices.
D)   a limited liability limited partnership.E) None of the above
F) B) and C) B

Question 13

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Accepted Answer

A) True 
 B)False

Question 14

Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

Accepted Answer

A)   all states in the United States.
B)   every state of which its members are citizens.
C)   any state in which it does business.
D)   no state-an LLC is not a "citizen."E) None of the above
F) A) and B)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Phone Apps LLC is forming as a limited liability company. To become a manager-managed firm, Phone Apps' members must

Accepted Answer

A)   refrain from participating in the firm's operations.
B)   designate a person or group of persons to manage the firm.
C)   elect to apply the principles of partnership law to their firm.
D)   expressly adopt the corporate form of business organization.E) A) and B)
F) All of the above A

Question 17

Like a partner in a partnership, the member of a limited liability company has the power to dissociate from the firm at any time, but may not have the right.

Accepted Answer

A) True 
 B)False  True

Question 18

Among the states, the law governing limited liability companies is far from uniform because

Accepted Answer

A)   there is no Uniform Limited Liability Company Act.
B)   a limited liability company is a hybrid form of business organization.
C)   state limited liability company statutes vary from state to state.
D)   the federal government has not enforced the law uniformly.E) All of the above
F) B) and D)

Question 19

Fern and Grover wish to combine their professional accountancy practices into a single firm that combines the pass-through tax status and other advantages of a partnership with limits to the personal liability of the partners. The appropriate business organization for this enterprise is most likely

Accepted Answer

A)   a limited liability partnership.
B)   a family limited liability partnership.
C)   a limited liability company.
D)   a limited liability limited partnership.E) A) and B)
F) None of the above

Question 20

When the member of a limited liability company engages in fraud on the firm's behalf, the member is not likely to be held personally liable.

Accepted Answer

A) True 
 B)False

Exam 17: Limited Liability Business Forms

Mero, Nico, and Osaka want to form Pharma Sales LLC (limited liability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?

Correct Answer
verified
The provisions of a limited liability co...
View Answer

Del and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Del and Efron

Correct Answer
verified

In some states, limited partners cannot withdraw from a limited partnership.

Correct Answer
verified

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 Answer
verified

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

Correct Answer
verified

Jess, Kia, and Len form a partnership to design and test energy storage facilities and equipment. The liability of all partners is limited to the amount of their investments in the firm. This entity is most likely

Correct Answer
verified

Because the basic formational structure is the same, it can be relatively easy to convert a general partnership into a limited liability partnership.

Correct Answer
verified

Global Capital S.A. is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

Correct Answer
verified

Jana and Kwan are partners in Lawyers LLP, a limited liability partnership. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with

Correct Answer
verified

Maia, a limited partner in Nano Investors, consults with Odet, the firm's general partner, regarding partnership business. For this activity, Maia is

Correct Answer
verified

Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

Correct Answer
verified

Correct Answer
verified
B

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Correct Answer
verified

Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

Correct Answer
verified

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

Correct Answer
verified

Phone Apps LLC is forming as a limited liability company. To become a manager-managed firm, Phone Apps' members must

Correct Answer
verified
A

Like a partner in a partnership, the member of a limited liability company has the power to dissociate from the firm at any time, but may not have the right.

Correct Answer
verified
True

Among the states, the law governing limited liability companies is far from uniform because

Correct Answer
verified

Fern and Grover wish to combine their professional accountancy practices into a single firm that combines the pass-through tax status and other advantages of a partnership with limits to the personal liability of the partners. The appropriate business organization for this enterprise is most likely

Correct Answer
verified

When the member of a limited liability company engages in fraud on the firm's behalf, the member is not likely to be held personally liable.

Correct Answer
verified

Exam 17: Limited Liability Business Forms

Mero, Nico, and Osaka want to form Pharma Sales LLC (limited liability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?

Correct AnswerverifiedThe provisions of a limited liability co...View AnswerShow Answer

Del and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Del and Efron

Correct AnswerverifiedShow Answer

In some states, limited partners cannot withdraw from a limited partnership.

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

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

Correct AnswerverifiedShow Answer

Jess, Kia, and Len form a partnership to design and test energy storage facilities and equipment. The liability of all partners is limited to the amount of their investments in the firm. This entity is most likely

Correct AnswerverifiedShow Answer

Because the basic formational structure is the same, it can be relatively easy to convert a general partnership into a limited liability partnership.

Correct AnswerverifiedShow Answer

Global Capital S.A. is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

Correct AnswerverifiedShow Answer

Jana and Kwan are partners in Lawyers LLP, a limited liability partnership. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with

Correct AnswerverifiedShow Answer

Maia, a limited partner in Nano Investors, consults with Odet, the firm's general partner, regarding partnership business. For this activity, Maia is

Correct AnswerverifiedShow Answer

Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Correct AnswerverifiedShow Answer

Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Phone Apps LLC is forming as a limited liability company. To become a manager-managed firm, Phone Apps' members must

Correct AnswerverifiedA

Like a partner in a partnership, the member of a limited liability company has the power to dissociate from the firm at any time, but may not have the right.

Correct AnswerverifiedTrue

Among the states, the law governing limited liability companies is far from uniform because

Correct AnswerverifiedShow Answer

Fern and Grover wish to combine their professional accountancy practices into a single firm that combines the pass-through tax status and other advantages of a partnership with limits to the personal liability of the partners. The appropriate business organization for this enterprise is most likely

Correct AnswerverifiedShow Answer

When the member of a limited liability company engages in fraud on the firm's behalf, the member is not likely to be held personally liable.

Correct AnswerverifiedShow Answer

Correct Answer
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The provisions of a limited liability co...
View Answer

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B

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A

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True

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