Question 1

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

Accepted Answer

The answer of Cookie Kiosk LLC's members and managers are...

Question 2

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

Accepted Answer

The answer of Drew is a beneficiary of a business...

Question 3

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

Accepted Answer

Corporations have the option to retain earnings and reinvest them in the business. This is called retained earnings and is subject to corporate tax rates. Partnerships and sole proprietorships do not have this option as their profits are passed through as personal income to their respective owners. A syndicate is not a recognized business entity and therefore cannot be taxed.

Question 4

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

Accepted Answer

A business trust is managed by its trustees.

Question 5

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

Accepted Answer

As a member of a limited liability company, Jay's liability for the company's debts is limited to the extent of his capital contribution. This is one of the key benefits of operating as an LLC, as it protects individual members from being held personally liable for the company's debts beyond their investment in the company.

Question 6

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 otherwise,participants in the firm's management will be considered to include

Accepted Answer

In most states, unless the members have agreed otherwise, all members of a limited liability company are considered participants in the firm's management. Therefore, choice A is the best answer.

Question 7

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

Accepted Answer

Dissociation refers to the situation where a partner's relationship with a partnership comes to an end, but the partnership continues to do business. Choice B, dissolution, refers to the process of winding up a partnership's affairs and terminating its existence. Choice C, winding up, also refers to the process of completing a partnership's unfinished business and distributing its assets to the partners. Choice D, wrongful, does not accurately describe the situation.

Question 8

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

Accepted Answer

LLCs are considered a "pass-through" entity, meaning the profits and losses pass through to the individual owners' tax returns. Therefore, unless QuizBooks chooses to be taxed as a corporation, joint venture, or sole proprietorship, the default tax status will be a partnership.

Question 9

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

Accepted Answer

The answer of As the beneficiary of a business trust,Kevin's...

Question 10

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

Accepted Answer

The given scenario describes a partnership between Build-Rite Construction Corporation and Deals-R-Us, Inc. to build an office and retail complex. They have combined their efforts and resources to achieve this goal. This form of partnership is known as a joint venture, where two or more businesses collaborate to work on a specific project or business venture. A business trust involves transferring ownership of assets to a trustee, while a joint stock company involves selling shares to raise capital. A syndicate involves a group of individuals or entities coming together to invest in a particular project or venture. Therefore, the best choice for this scenario is C - a joint venture.

Question 11

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

Accepted Answer

A syndicate formed to buy a professional football team could be set up as either a corporation or a partnership. A corporation would provide limited liability protection to its shareholders while a partnership would allow for a more flexible management structure and profit-sharing arrangements. Both options would allow Ray, Sully, and Toma to pool their resources and invest in the football team together.

Question 12

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

Accepted Answer

China Bank can become a member of the LLC in the United States. Being a foreign entity does not prevent it from being a member of an LLC.

Question 13

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

Accepted Answer

Metro Purchasing Cooperative is a form of business organization where individuals pool their resources to gain advantages in the market. This allows the cooperative to leverage the collective buying power of its members and negotiate better prices for goods and services. They may also share expertise and knowledge, reducing costs and increasing efficiency. While members of the cooperative may have limited personal liability for the acts of the cooperative, this is not the primary advantage of this form of organization. They are subject to state laws and regulations, and will still have to pay taxes on their business income.

Question 14

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

Accepted Answer

As a member of a limited liability company, Kristal can participate in the firm's management to any extent without assuming personal liability for the firm's debts. This is one of the key advantages of an LLC structure.

Question 15

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

Accepted Answer

The answer of Location! Realty LLC is a limited liability...

Question 16

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

Accepted Answer

The answer of Mit-E Mart LLC was formed in New...

Question 17

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

Accepted Answer

As an LLC, Serious Gamers, LLC is not governed by corporate law or sole proprietorship law. Syndicate law is not a recognized area of law. Therefore, the only applicable option is partnership law, which is often used as a guide for LLC disputes when there is no specific provision in the operating agreement or statute.

Question 18

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

Accepted Answer

In most states, unless an LLC's members have agreed otherwise, voting rights are apportioned according to the members' capital contributions. This means that the more money a member has invested in the company, the more voting power they have. Therefore, the correct choice is A) capital contributions.

Question 19

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

Accepted Answer

As the owner and manager of a business trust, Elmo is required to both distribute the profits and manage the property. This is the standard responsibility of a business trust manager/owner.

Question 20

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 entity for this project might be

Accepted Answer

A joint venture would be the most appropriate legal entity for this project as it allows both Omega Corporation and Precision Coding, Inc. to combine their resources and expertise without creating a new separate entity. Joint ventures are often formed for a specific project or purpose and allow the parties involved to share profits and losses. A business trust and syndicate are not appropriate in this case as they involve a group of investors rather than two companies combining their resources. A joint stock company may be too complicated for this specific project.

Quiz 28: Limited Liability Companies Special Business Forms