Question 1

Burt has gone to a commercial bank to negotiate a loan for the LLC in which he is a member.He tells the bank that he is authorized to act on behalf of and to bind the company.What is the best way for the bank to verify whether Burt does in fact have the authority he claims?

Accepted Answer

A)   Get him to sign a written statement.
B)   Call another member of the LLC for confirmation.
C)   Check the articles of organization.
D)   Nothing need be done because all LLC members have the right to bind the company, as do general partners.E) None of the above
F) A) and B)

Question 2

Personal financial contributions may be required by previous agreement with regard to

Accepted Answer

A)   LLCs.
B)   LLPs.
C)   business trusts.
D)   franchisors.E) All of the above
F) C) and D)

Question 3

In Lieberman v.Wyoming.com,LLC,Lieberman dissociated from the LLC and demanded cash for his share of the company.The remaining members voted to continue the company,and the operating agreement discussed distribution in the case of dissolution but not simple dissociation.The court decided that

Accepted Answer

A)   fundamental common law rules of fairness should apply and Lieberman was due a fair share to be decided by independent business analysts.
B)   Lieberman had rightfully dissociated from the company but since the operating agreement was silent as to distribution should the company continue, he forfeited all rights upon dissociation and should receive nothing.
C)   because the operating agreement was silent on the issue, the Uniform Limited Liability Company Act controlled and Lieberman should get his initial investment back but nothing above that.
D)   Lieberman had rightfully dissociated from the company but since the operating agreement was silent as to distribution and state LLC law was also silent regarding the issue, Lieberman was not entitled to distribution for dissociation but would retain his interest in the company until dissolution occurs.E) A) and B)
F) C) and D)

Question 4

Both managing members and controlling members owe a fiduciary duty to other members.

Accepted Answer

A) True 
 B)False

Question 5

Carlos is a member of an LLC along with three others.After one year,despite their best efforts,the business closes and the bank that extended them a loan sues for repayment.The bank may

Accepted Answer

A)   sue Carlos for only 25 percent of its loss under rules pertaining to LLCs.
B)   sue Carlos for the entire amount because Carlos is jointly and severally liable for the loss.
C)   sue Carlos only if he is a managing member.
D)   sue the LLC but may not sue Carlos.E) C) and D)
F) A) and D)

Question 6

Trish is a partner in an LLP,and the partnership is having a cash flow problem.To alleviate the problem,the partnership has initiated a capital call for each partner to contribute an additional
$25,000 to the business.If Trish cannot come up with the necessary funds,she may be forced to sell her interest in the partnership.

Accepted Answer

A) True 
 B)False

Question 7

LLPs are formed with the filing of _______ with the proper public official.

Accepted Answer

A)   a statement of qualification
B)   a certificate of formation: LLP
C)   a record of business creation
D)   articles of organizationE) B) and C)
F) C) and D)

Question 8

Owners in an LLC are called _______.

Accepted Answer

The answer of Owners in an LLC are called _______....

Question 9

When a member of an LLC dies,the business entity automatically ceases to exist.

Accepted Answer

A) True 
 B)False

Question 10

Currently,LLPs are often used to protect family businesses as they provide a way to resolve

Accepted Answer

A)   management disputes.
B)   capitalization disputes.
C)   issues regarding transition from one generation to another.
D)   issues of family fiduciary duties and rights to represent and bind the business.E) A) and B)
F) A) and C)

Question 11

Limited liability partnerships are formed when a general partnership files a _______.

Accepted Answer

statement ...

Question 12

With regard to taxation,LLPs are treated as

Accepted Answer

A)   pass-through entities.
B)   corporations.
C)   nonprofit organizations.
D)   hybrid entities.E) A) and C)
F) C) and D)

Question 13

The amount and methods of capitalizing an LLC are often controlled by the

Accepted Answer

A)   articles of organization.
B)   certificate of organization.
C)   statement of qualification.
D)   operating agreement.E) A) and C)
F) A) and D)

Question 14

LLPs were created to

Accepted Answer

A)   limit the taxation burdens existing in LLCs.
B)   ease the costs and filing requirements present with LLCs.
C)   provide limited protection for general partners, increasing the protection offered by LLCs.
D)   increase the duration of the business entity permitted under LLC statutes.E) C) and D)
F) A) and B)

Question 15

The operating agreement of the LLC often controls the amount and methods of capitalizing the business.

Accepted Answer

A) True 
 B)False

Question 16

Because it is not a taxable entity,an LLP

Accepted Answer

A)   files an information tax return.
B)   does not need to file a tax return.
C)   needs to file only a federal tax return.
D)   needs to file only a state and local tax return.E) C) and D)
F) B) and D)

Question 17

The certificate of organization may restrict membership in an LLC to only those possessing a professional license in a named field.

Accepted Answer

A) True 
 B)False

Question 18

LLCs were originally created by the

Accepted Answer

A)   New York legislature.
B)   California legislature.
C)   Wyoming legislature.
D)   Delaware legislature.E) None of the above
F) A) and B)

Question 19

How may an LLC be terminated?

Accepted Answer

LLCs may end by dissolution or dissociat...

Exam 14: Limited Liability Companies and Limited Liability Partnerships

Owners in an LLC are called _______.

Correct Answer
verified

Limited liability partnerships are formed when a general partnership files a _______.

Correct Answer
verified
statement ...
View Answer

Burt has gone to a commercial bank to negotiate a loan for the LLC in which he is a member.He tells the bank that he is authorized to act on behalf of and to bind the company.What is the best way for the bank to verify whether Burt does in fact have the authority he claims?

Correct Answer
verified

With regard to taxation,LLPs are treated as

Correct Answer
verified

Because it is not a taxable entity,an LLP

Correct Answer
verified

The operating agreement of the LLC often controls the amount and methods of capitalizing the business.

Correct Answer
verified

Personal financial contributions may be required by previous agreement with regard to

Correct Answer
verified

Correct Answer
verified

The amount and methods of capitalizing an LLC are often controlled by the

Correct Answer
verified

Both managing members and controlling members owe a fiduciary duty to other members.

Correct Answer
verified

In Lieberman v.Wyoming.com,LLC,Lieberman dissociated from the LLC and demanded cash for his share of the company.The remaining members voted to continue the company,and the operating agreement discussed distribution in the case of dissolution but not simple dissociation.The court decided that

Correct Answer
verified

LLPs are formed with the filing of _______ with the proper public official.

Correct Answer
verified

LLCs were originally created by the

Correct Answer
verified

Carlos is a member of an LLC along with three others.After one year,despite their best efforts,the business closes and the bank that extended them a loan sues for repayment.The bank may

Correct Answer
verified

How may an LLC be terminated?

Correct Answer
verified
LLCs may end by dissolution or dissociat...
View Answer

LLPs were created to

Correct Answer
verified

When a member of an LLC dies,the business entity automatically ceases to exist.

Correct Answer
verified

Currently,LLPs are often used to protect family businesses as they provide a way to resolve

Correct Answer
verified

The certificate of organization may restrict membership in an LLC to only those possessing a professional license in a named field.

Correct Answer
verified

Exam 14: Limited Liability Companies and Limited Liability Partnerships

Owners in an LLC are called _______.

Correct AnswerverifiedShow Answer

Limited liability partnerships are formed when a general partnership files a _______.

Correct Answerverifiedstatement ...View AnswerShow Answer

Burt has gone to a commercial bank to negotiate a loan for the LLC in which he is a member.He tells the bank that he is authorized to act on behalf of and to bind the company.What is the best way for the bank to verify whether Burt does in fact have the authority he claims?

Correct AnswerverifiedShow Answer

With regard to taxation,LLPs are treated as

Correct AnswerverifiedShow Answer

Because it is not a taxable entity,an LLP

Correct AnswerverifiedShow Answer

The operating agreement of the LLC often controls the amount and methods of capitalizing the business.

Correct AnswerverifiedShow Answer

Personal financial contributions may be required by previous agreement with regard to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The amount and methods of capitalizing an LLC are often controlled by the

Correct AnswerverifiedShow Answer

Both managing members and controlling members owe a fiduciary duty to other members.

Correct AnswerverifiedShow Answer

In Lieberman v.Wyoming.com,LLC,Lieberman dissociated from the LLC and demanded cash for his share of the company.The remaining members voted to continue the company,and the operating agreement discussed distribution in the case of dissolution but not simple dissociation.The court decided that

Correct AnswerverifiedShow Answer

LLPs are formed with the filing of _______ with the proper public official.

Correct AnswerverifiedShow Answer

LLCs were originally created by the

Correct AnswerverifiedShow Answer

Carlos is a member of an LLC along with three others.After one year,despite their best efforts,the business closes and the bank that extended them a loan sues for repayment.The bank may

Correct AnswerverifiedShow Answer

How may an LLC be terminated?

Correct AnswerverifiedLLCs may end by dissolution or dissociat...View AnswerShow Answer

LLPs were created to

Correct AnswerverifiedShow Answer

When a member of an LLC dies,the business entity automatically ceases to exist.

Correct AnswerverifiedShow Answer

Currently,LLPs are often used to protect family businesses as they provide a way to resolve

Correct AnswerverifiedShow Answer

The certificate of organization may restrict membership in an LLC to only those possessing a professional license in a named field.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
statement ...
View Answer

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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
LLCs may end by dissolution or dissociat...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified