Deck 38: Limited Liability Companies Special Business Forms

Question 1

A limited liability company as an entity is not liable for the wrongful acts or omissions of its members.

Answer 1

False

Question 2

State limited liability company statutes are uniform.

Answer 2

False

Question 3

Foreign investors are not allowed to become limited liability company members.

Answer 3

False

Question 4

A limited liability company (LLC) formed in one state but doing business in another state is referred to in the second state as a foreign LLC.

Question 5

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

Question 6

A limited liability company is not a citizen of any state.

Question 7

Most limited liability company statutes have no provisions regarding members' meetings.

Question 8

A joint venture resembles a partnership but is taxed like a corporation.

Question 9

The liability of the members of a limited liability company is limited to the amount of their investments.

Question 10

When a member dissociates form a limited liability company, the member's duty of loyalty continues.

Question 11

Some states provide that in the absence of an agreement to the contrary each member of a limited liability company has one vote.

Question 12

A business trust resembles a corporation.

Question 13

In many states, an operating agreement is not required for a limited liability company to exist.

Question 14

A limited liability company must be managed by non-member managers.

Question 15

Normally, a dissociated member of an limited liability company (LLC) has the right to force the LLC to dissolve.

Question 16

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

Question 17

A limited liability company that has only one member cannot be taxed.

Question 18

A limited liability company, as an entity, pays no taxes.

Question 19

A limited liability company can be taxed as a partnership.

Question 20

A joint venturer can be held personally liable for the venture's debts.

Question 21

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 22

Binary Corporation and Coda, Inc., two software firms, wish to combine their research and development capabilities to make a special, limited edition computer game. The appropriate legal en?tity for this project is most likely

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

Question 23

Accumulated Capital Corporation and Business Funds, 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 24

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 25

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

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

Question 26

Cecilia's Day Spa, LLC, is a member-managed limited liability company. If the law in Cecilia'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) the number of members.
D) transactions with the firm.

Question 27

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 28

Delta Music Company and eDistribution & Marketing 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 29

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 investment in the firm.
C) to the extent that the other members do not pay the debts.
D) to the full extent.

Question 30

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 31

Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to

A) business trusts.
B) cooperatives.
C) corporations.
D) partnerships.

Question 32

Coco is considering forms of business organization for her concessions business-Coco's Cupcakes. Most states require that a limited liability company have at least

A) no minimum number of members.
B) at least one member.
C) at least two members.
D) at least three members, including at least one general partner.

Question 33

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 34

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

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

Question 35

B2B, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is gov?erned by

A) the applicable state LLC statute.
B) the federal Uniform LLC Law.
C) the principles of partnership law.
D) the state corporation statute.

Question 36

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 37

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

A) a corporation.
B) a joint venture.
C) a partnership.
D) a cooperative.

Question 38

Esteban and Florian want to form a limited liability company (LLC) to manage their business, Gordian Nuts. LLC statutes have been adopted in

A) all states.
B) no states.
C) less than one-fifth of the states.
D) only Wyoming and Florida.

Question 39

Location! Realty LLC is a limited liability company (LLC). 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 40

Owen, Petunia, Quentin, and Rita combine to finance the building of Surfside Stores, a waterfront 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 41

Alpha Communications, a partnership, publishes consumer periodicals, including Science Today. Beta Publications, also a partnership, pub?lishes professional periodicals, including Technology Review. Alpha and Beta agree to pool their resources in a one-time deal to print and market a book, Unlimited Future. In contracting with Gamma Printing Supplies, Inc., for paper to print the book, Alpha commits fraud. In contracting with Delta Literary Agency for articles to use in Technology Review, Beta commits fraud. Gamma and Delta file suits against Alpha and Beta. What type of business organization has Alpha and Beta formed? To whom, if anyone, is Alpha liable? To whom, if anyone, is Beta liable?

Question 42

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?