Question 1

Usually the members of a limited liability company:

Accepted Answer

Generally, the members of a limited liability company may not transfer membership interests without the consent of the other members, as specified in the company's operating agreement or articles of organization.

Question 2

To create a limited liability company, creators must produce:

Accepted Answer

To create a limited liability company (LLC) in the United States, the creators must produce articles of organization. This document outlines the structure and operating procedures of the LLC and is filed with the state government.

Question 3

In In re 1545 Ocean Avenue, LCC, where the two managers of a real estate development limited liability company disagreed about the project and one of the managers, King, sued for work to stop and the company to be dissolved, the appeals court reversed the trial court's decision to grant King's requests because:

Accepted Answer

The appeals court reversed the trial court's decision to grant King's requests because there was not sufficient evidence that the LLC could not effectively operate under the operating agreement. Therefore, the LLC could continue to operate under its existing agreement.

Question 4

The company name, the address of the company or its registered agent, the names and addresses of company members and whether any members are to be liable for company debts are all included in a limited liability company's:

Accepted Answer

The correct term for the document that includes the company name, address, members' names and addresses, and liability details for a limited liability company (LLC) is the "articles of organization," not any of the options provided.

Question 5

According to the IRS, a limited liability company must exist:

Accepted Answer

A limited liability company (LLC) does not have a fixed lifespan according to the IRS. The duration of an LLC can vary and is often specified in the company's operating agreement, without the constraints of the options provided.

Question 6

The manager of a limited liability company:

Accepted Answer

There are no specific requirements for who can be the manager of a limited liability company, so none of the other choices are correct. The manager can be a member of the company or outside individual hired for the role. They also do not need a law degree or to be an American citizen.

Question 7

The relation of the parties taking part in a limited liability company are:

Accepted Answer

A limited liability company must have two or more members, and each member has a membership interest in the business. However, members have limited liability for business debts, not unlimited liability as stated in option B. Therefore, option D is the correct choice. Option E includes inaccurate information about unlimited liability.

Question 8

In In re 1545 Ocean Avenue, LCC, where the two managers of a real estate development limited liability company disagreed about the project and one of the managers, King, sued for work to stop and the company to be dissolved, the appeals court held that:

Accepted Answer

The appeals court found that there was not sufficient evidence to prove that the LLC could not effectively operate under the operating agreement, thus the trial court's decision to dissolve the company and grant King's requests was not correct.

Question 9

The ____ of a limited liability company establishes the company's method of management, allocation of profits and losses among members, restrictions on the transfer of membership interests, and the process to be followed in dissolving the company.

Accepted Answer

The correct term for the document that outlines the management structure, profit allocation, transfer restrictions, and dissolution process of a limited liability company is the "operating agreement," which is not listed among the provided choices.

Question 10

The manager of a limited liability company:

Accepted Answer

A manager of a limited liability company need not be a member of the company. They may be an external hire or an existing employee promoted to the role. There are no restrictions on their nationality or educational background.

Question 11

Unlike a corporation:

Accepted Answer

Unlike a corporation, a partnership is not a separate entity for tax purposes. Instead, the individual partners report their share of the partnership's income on their personal tax returns. Therefore, a partnership does not pay income taxes on its income.

Question 12

To create a limited liability company, creators must produce:

Accepted Answer

To create a limited liability company (LLC), creators must file "articles of organization" with the relevant state authority, not any of the options listed. None of the choices provided (A, B, C, D) accurately describe the document required to establish an LLC.

Question 13

A potential drawback of sole proprietorships and partnerships is that the parties involved have:

Accepted Answer

Sole proprietorships and partnerships do not have a separate legal entity from their owners, meaning that the owners are personally responsible for all business debts and liabilities. This is known as unlimited liability, and it can result in the personal assets of the owners being used to pay off business debts. This can be a major drawback for individuals considering these types of businesses, as it puts their personal finances at risk.

Question 14

Unlike a corporation, a limited liability company is:

Accepted Answer

A limited liability company (LLC) is not automatically granted perpetual life like a corporation; its duration is typically determined by the terms set in its operating agreement.

Question 15

In In re 1545 Ocean Avenue, LCC, where the two managers of a real estate development limited liability company disagreed about the project and one of the managers, King, sued for work to stop and the company to be dissolved, the appeals court reversed the trial court's decision to grant King's requests because:

Accepted Answer

The appeals court reversed the trial court's decision because there was not sufficient evidence that the LLC could not effectively operate under the operating agreement, which means the LLC could still function despite the disagreement.

Question 16

The company name, the address of the company or its registered agent, the names and addresses of company members and whether any members are to be liable for company debts are all included in a limited liability company's:

Accepted Answer

The articles of organization is a legal document that includes the required information for registering a limited liability company, such as the company name, address, member names and addresses, and liability provisions. The articles of institution, articles of incorporation, articles of sale, and articles of administration are either not applicable or refer to different types of business structures.

Question 17

A limited liability company may be terminated:

Accepted Answer

A limited liability company (LLC) can be terminated for various reasons, including the retirement or death of a member, the unanimous consent of all members, or the expulsion of a member. These events do not automatically result in termination but can lead to it based on the LLC's operating agreement or state laws.

Question 18

The articles of organization filed for a LLC must include:

Accepted Answer

The articles of organization for an LLC must include whether it will be managed by its members or by a manager, as well as the names and addresses of its members. The classes of stock to be issued are not applicable to an LLC, as they are typically associated with a corporation, not an LLC.

Question 19

The ____ of a limited liability company establishes the company's method of management, allocation of profits and losses among members, restrictions on the transfer of membership interests, and the process to be followed in dissolving the company.

Accepted Answer

The operating agreement is the document that outlines the management and operation of a limited liability company (LLC). It typically includes provisions about the allocation of profits and losses among members, restrictions on the transfer of membership interests, and the process for dissolving the company. The other options listed are not typically used to establish the structure and management of an LLC.

Question 20

Most limited liability companies have statues that state that:

Accepted Answer

Most limited liability companies have statutes that state that no member or manager will be personally liable for the debts of the company. This is the main advantage of forming an LLC, as it protects the personal assets of the owners from business debts and obligations.

Quiz 12: Business Organizations

Usually the members of a limited liability company:

To create a limited liability company, creators must produce:

The company name, the address of the company or its registered agent, the names and addresses of company members and whether any members are to be liable for company debts are all included in a limited liability company's:

According to the IRS, a limited liability company must exist:

The manager of a limited liability company:

The relation of the parties taking part in a limited liability company are:

In In re 1545 Ocean Avenue, LCC, where the two managers of a real estate development limited liability company disagreed about the project and one of the managers, King, sued for work to stop and the company to be dissolved, the appeals court held that:

The ____ of a limited liability company establishes the company's method of management, allocation of profits and losses among members, restrictions on the transfer of membership interests, and the process to be followed in dissolving the company.

The manager of a limited liability company:

Unlike a corporation:

To create a limited liability company, creators must produce:

A potential drawback of sole proprietorships and partnerships is that the parties involved have:

Unlike a corporation, a limited liability company is:

The company name, the address of the company or its registered agent, the names and addresses of company members and whether any members are to be liable for company debts are all included in a limited liability company's:

A limited liability company may be terminated:

The articles of organization filed for a LLC must include:

The ____ of a limited liability company establishes the company's method of management, allocation of profits and losses among members, restrictions on the transfer of membership interests, and the process to be followed in dissolving the company.

Most limited liability companies have statues that state that: