Deck 28: Limited Liability Companies Special Business Forms

Question 1

The members,managers,and agents of a limited liability company are liable for its obligations by virtue of their status.

Answer 1

False

Question 2

A limited liability company is required to have an operating agreement.

Answer 2

False

Question 3

Forming a limited liability company requires filing articles of organization in a state office.

Answer 3

True

Question 4

A foreign limited liability company (LLC)is an LLC owned by an entity outside the United States.

Question 5

Giving control of a joint venture to one of its participants does not affect the status of the relationship.

Question 6

An operating agreement for a limited liability company need not be in writing.

Question 7

Unless otherwise agreed,the participants in a joint venture have an equal voice in controlling the enterprise.

Question 8

A limited liability company limits the personal liability of its members.

Question 9

For federal jurisdictional purposes,a limited liability company can choose to be treated like a corporation.

Question 10

The dissociation of a mem?ber of a limited liability company in violation of the operating agreement is legally wrongful.

Question 11

Most limited liability company statutes have strict provisions regu?lating members' meetings.

Question 12

In a limited liability company,members must participate in the manage?ment of the company.

Question 13

A limited liability company is operated in compliance with state law.

Question 14

A limited liability company cannot be taxed as a partnership.

Question 15

Most limited liability company (LLC)statutes provide that unless the members agree otherwise,all profits of the LLC will be divided equally.

Question 16

In a limited liability company,members do not have to participate in its manage?ment.

Question 17

A limited liability company is a legal entity apart from its owners.

Question 18

For federal income tax purposes,a limited liability company can choose to be taxed like a corporation.

Question 19

Federal law dictates the requirements for the formation of a limited liability company.

Question 20

In a limited liability company,members cannot participate in its management.

Question 21

Unless otherwise agreed,the participants in a joint venture share its profits equally.

Question 22

A cooperative may take the form of a corporation.

Question 23

The owners of an unincorporated cooperative have joint liability for its obligations.

Question 24

The participants in a joint venture have more implied and apparent authority than the partners in a partnership.

Question 25

A syndicate may exist in the form of a partnership but not a corporation.

Question 26

A joint venture is taxed like a partnership.

Question 27

Bee Hive Honey,LLC's members include Chad.For purposes of suing and being sued,Bee Hive Honey is

A) an aggregate of Chad and the other members.
B) a natural person in the members' "family."
C) a legal entity apart from the owners.
D) a non-participating third party.

Question 28

Fay is a member of Garden Groves LLC.Like other members of limited liability companies,Fay's liability for Garden Groves's obligations resembles the liability of

A) a member of a joint venture.
B) an owner of a sole proprietorship.
C) a partner of a partnership.
D) a shareholder of a corporation.

Question 29

The owners of a joint stock company are personally liable for its obligations.

Question 30

The beneficiaries of a business trust are personally liable for its obligations.

Question 31

Dani is considering forms of business organization for her financial advisory firm.Like most states,Dani's state requires that to form a limited liabil?ity company,she must file with a central state agency

A) articles of certification.
B) articles of formation.
C) articles of organization.
D) no specific documents.

Question 32

The owners of an incorporated cooperative are personally liable for its obligations.

Question 33

A group of individuals getting together to finance a particular project may form a syndicate.

Question 34

A syndicate may be organized as a corporation but not as a partnership.

Question 35

Greta is a member of Hovercraft LLC.As a member,Greta is

A) a manager or officer, but not an owner.
B) an investor, but not a manager, officer, or owner.
C) an owner.
D) a participant, but not an investor, manager, officer, or owner.

Question 36

In some states,business trusts pay corporate taxes.

Question 37

Like a corporation,the ownership of a joint stock company is represented by shares of stock.

Question 38

High Pointe LLC's members include Irvin.For purposes of holding title to property,High Pointe is

A) an aggregate of Irvin and the other members.
B) a natural person in the members' "family."
C) a legal entity apart from the owners.
D) a non-participating third party.

Question 39

A joint venture does not terminate unless one of its participants dies.

Question 40

A business trust is created by a written trust agreement.

Question 41

Cookie Kiosk LLC's members and managers are Dwight,Emma,and Fawn.After Dwight's relationship to Cookie Kiosk ends,Emma and Fawn agree to discontinue the firm's business.This is most likely

A) advisable.
B) optional.
C) required.
D) wrongful.

Question 42

Drew is a beneficiary of a business trust.As a beneficiary,Drew is required to

A) distribute the profits and manage the property.
B) distribute the profits only.
C) manage the property only.
D) neither distribute the profits nor manage the property.

Question 43

Energy Resources,LLC,is a limited liability company.Rather than dis?tribute its profits to its members,Energy wants to reinvest the profits in its business.For this reason,Energy may prefer to be taxed as

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

Question 44

Loni,Michel,and Nita are investors in Oceanic Exploration,a busi?ness trust.A business trust is managed by its

A) directors and officers.
B) general partners.
C) managing members.
D) trustees.

Question 45

Jay is a member of Kappa,LLC,a limited liability company.Jay is liable for Kappa's debts

A) in proportion to the total number of members.
B) to the extent of his capital contribution.
C) to the extent that the other members do not pay the debts.
D) to the full extent.

Question 46

CPA Accounting,LLC,is a limited liability company.If the law in CPA's state is like the law in most states,unless the members have agreed other?wise,participants in the firm's management will be considered to include

A) all members.
B) no member.
C) one member.
D) two members, including at least one general partner.

Question 47

Flip is a member of Great States Trucking LLC.Flip's relationship to Great States ends,but the firm continues to do business.This is

A) dissociation.
B) dissolution.
C) winding up.
D) wrongful.

Question 48

QuizBooks LLC is a limited liability company.Like any other LLC,unless QuizBooks chooses otherwise,the firm will be taxed as

A) a corporation.
B) a joint venture.
C) a partnership.
D) a sole proprietorship.

Question 49

As the beneficiary of a business trust,Kevin's liability for trust debts and obligations is

A) limited to his capital investment in the trust.
B) limited to his personal assets.
C) nothing.
D) unlimited.

Question 50

Build-Rite Construction Corporation and Deals-R-Us,Inc.,combine their efforts to build an office and retail complex.Their form of business organization is

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

Question 51

Ray,Sully,and Toma form a syndicate to buy a professional football team.This syndicate could be set up as

A) a corporation only.
B) a corporation or a partnership.
C) a partnership only.
D) neither a corporation nor a partnership.

Question 52

China Bank is a foreign entity-a firm owned and operated by investors in a foreign country.With respect to an LLC in the United States,China Bank can

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.

Question 53

Jin,Karlo,and other consumers form Metro Purchasing Cooperative.This form of business organization makes it possible for these individuals to

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 market.

Question 54

Kristal is a member of Laboratory CSI Services,LLC,a limited liability company.Kristal can participate in the firm's management

A) only to the extent that she assumes liability for the firm's debts.
B) only to the extent of her investment in the firm.
C) to any extent.
D) to no extent.

Question 55

Location! Realty LLC is a limited liability company.Like other LLCs,for federal jurisdictional purposes,Location! Realty is most likely a citizen of

A) all states.
B) every state in which its members are citizens.
C) no state.
D) only the state in which it was formed.

Question 56

Mit-E Mart LLC was formed in New Jersey.Mit-E Mart's members are Odel,who is a citizen of New Jersey,and Pola,who is a citizen of New York.For federal diversity jurisdictional purposes,Mit-E is a citizen of

A) all states.
B) New Jersey and New York.
C) New Jersey only.
D) no state.

Question 57

Serious Gamers,LLC,is a limited liability company.Among the mem?bers,a dispute arises that their operating agreement does not cover.No statute applies.The dispute is governed by the principles of

A) corporate law.
B) partnership law.
C) sole proprietorship law.
D) syndicate law.

Question 58

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

A) capital contributions.
B) participation in management.
C) seniority.
D) transactions with the firm.

Question 59

Elmo is the owner and manager of a business trust.Under the terms of a business trust,Elmo is required to

A) distribute the profits and manage the property.
B) distribute the profits only.
C) manage the property only.
D) neither distribute the profits nor manage the property.

Question 60

Omega Corporation and Precision Coding,Inc.,two software firms,wish to combine their research and development capabilities to make a special,limited edition computer game.The most appropriate legal en?tity for this project might be

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

Question 61

Jade,Kelly,and Lila organize a nonprofit business-JKL Markets,Inc.-to buy groceries from wholesalers and sell them to consumers who buy a membership in JKL.Because the firm is a nonprofit entity,it is able to sell the groceries for less than a commercial grocer could.What form of business organization is JKL Markets? Is it significant that JKL is incorporated?

Question 62

Consumers in Delta City form a business organization to provide,without profit,an economic service to its members.This is

A) a business trust.
B) a cooperative.
C) a corporation.
D) a joint stock company.

Question 63

National Capital Corporation and International Investments,Inc.,form a joint stock company.The ownership of a joint stock company is repre?sented by

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

Question 64

Big Valu Grocery Stores is an unincorporated cooperative.Big Valu and other unincorporated cooperatives are generally treated like

A) business trusts.
B) corporations.
C) joint stock companies.
D) partnerships.

Question 65

Vela and other farmers in Washington County form a business organi?zation to provide,without profit,an economic service to its members.This is

A) a business trust.
B) a cooperative.
C) a corporation.
D) a joint stock company.

Question 66

Exotic Stuff Company and First Pier,Inc.,form a business organiza?tion to engage in importing and exporting.Its property is held in the names of the members and its shareholders have personal liability.This business or?ganization is

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

Question 67

Petra,Queenie,and Randall want to form Sales-to-Infinity,LLC (limited li?ability company).What should they provide in their operating agreement? If they fail to include some important operating details,what determines these details?

Question 68

Fab is the owner and manager of a business trust.Gilly is the benefici?ary.Responsibility for the debts and obligations of the trust rest with

A) Fab and Gilly.
B) Fab only.
C) Gilly only.
D) neither Fab nor Gilly.

Question 69

Owen,Paula,Quinn,and Rita combine to finance the building of Super Stores,a shopping mall.Their selected form of business organization is an in?vestment group,or

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

Question 70

Neverend Music Company and Monotonous Metronome Corporation form a joint stock company.A joint stock company can be formed for,at the most,

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

Question 71

Buyers Club is an incorporated cooperative.Like other incorporated coop?eratives,Buyers Club distributes profits to its owners on the basis of

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 72

Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers,Inc.,which manages the property and distributes the profits to Dreem and EZ.This form of a business organization is

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