Question 1

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

Accepted Answer

To form a limited liability company (LLC), Dani must file articles of organization with the state agency. These documents establish the LLC as a separate legal entity and spell out important details about the business, such as its name, purpose, management structure, and ownership. Articles of certification and articles of formation are not typically used in forming an LLC, and there are always specific documents required to form an LLC.

Question 2

Newt is considering forms of business organization for Newton Design, an ar?chitectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for

Accepted Answer

The answer of Newt is considering forms of business organization...

Question 3

Homer's Remodeling, 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 most likely governed by the principles of

Accepted Answer

Limited liability companies are typically governed by partnership law, as they share many similarities with partnerships in terms of structure and management. Therefore, in the absence of an operating agreement or applicable statutes, the principles of partnership law would likely be used to resolve the dispute among the members of Homer's Remodeling, LLC.

Question 4

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 has the ability to participate in the management of the firm to any extent, regardless of her investment or potential liability for the company's debts. Limited liability companies are designed to provide flexibility in management and ownership structure.

Question 5

Jody owns KuppaJava Kiosks, a sole proprietorship. Jody's liability is

Accepted Answer

As a sole proprietorship, Jody has unlimited liability. This means that Jody is personally responsible for all debts and legal issues related to the business, even if it exceeds the amount of his or her original investment.

Question 6

Will and Jay form Northwest Air Express, a general partnership. The essential elements of this partnership do not include

Accepted Answer

While goodwill may be an important consideration for some partnerships, it is not an essential element of a general partnership. The essential elements include a sharing of profits and losses, joint ownership of the business, and an equal right to management in the business.

Question 7

Sweet Stuff is a general partnership that sells candy, cards, and flowers. Sweet Stuff has ten partners. Jill and Amy each have a 25 percent interest in the firm. The other partners each have a 10 percent interest. In management matters

Accepted Answer

In a general partnership, each partner has an equal vote in management matters. Therefore, each partner in Sweet Stuff would have one equal vote regardless of their percentage interest in the firm.

Question 8

Cody is a partner in Delta Accounting Service. Cody can inspect

Accepted Answer

The answer of Cody is a partner in Delta Accounting...

Question 9

Venture Capital, LP, is a limited partnership. Its limited partners include more than 150 sophisticated investors and investment professionals. A Venture limited partner loses his or her limited liability if he or she

Accepted Answer

A limited partner loses limited liability if he or she takes an active role in managing the company.

Question 10

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

Accepted Answer

Most states require that a limited liability company have at least one member. The other options are not accurate as the minimum number of members required for an LLC is not two or three, and there is no requirement for a general partner in an LLC.

Question 11

Jordana is a member of Klondike Coffee, LLC, a limited liability company. Jordana is liable for Klondike's debts

Accepted Answer

As a member of a limited liability company, Jordana's liability is limited to the extent of her capital contribution. In other words, she is only liable for the debts of the company up to the amount that she invested in the company.

Question 12

Flip is a member of Great States Trucking LLC. Flip ceases to be associated with the carrying on of the firm's business, but not in violation of the operating agreement. This is

Accepted Answer

Flip's departure from the firm while not violating the operating agreement is known as dissociation.

Question 13

Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is Ben's

Accepted Answer

Ben still retains full ownership and control over his livestock breeding business, so he is not in a partnership or joint venture with Circle C Ranch. Circle C Ranch is not acting on Ben's behalf as an agent. Therefore, the best choice is B - Circle C Ranch is Ben's creditor, as it is lending him money that he will gradually pay back through a share of his profits.

Question 14

Jumbo Jumpin' Jelly Beans, LLC, is a limited liability company. Unless indi?cated otherwise on Jumbo's federal tax form, the firm will be taxed as

Accepted Answer

A limited liability company (LLC) is typically taxed as a partnership by default unless it elects to be taxed as a corporation.

Question 15

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debts

Accepted Answer

As a limited partner, Lucy is only personally liable for the debts to the extent of her capital contribution. This means that she is only liable for the amount of money she originally invested in the partnership and not for any additional debts or liabilities incurred by the partnership.

Question 16

Fern and Gray want to form a limited partnership to manage two restaurants, Café Latte and Deli Delite. In most states, a limited partnership will be created when

Accepted Answer

The answer of Fern and Gray want to form a...

Question 17

Hollister and Gladys do business as partners in Frothy Confections. For federal income tax purposes, Frothy Confections would be treated as

Accepted Answer

As a partnership, Frothy Confections would be treated as a pass-through entity for federal income tax purposes, meaning that the profits and losses of the partnership would flow through to the individual partners' tax returns and be taxed at their individual tax rates.

Question 18

Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Mabel fails to account for the profit. To her firm, Mabel is

Accepted Answer

Mabel is liable for breach of the duty of loyalty, which requires a fiduciary to act primarily in the best interests of their principal (in this case, One World Realty). By failing to account for the profit, Mabel acted in her own self-interest rather than the best interests of the firm. Breaching this duty could result in legal action being taken against her.

Question 19

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 20

Bo and Clancy decide to do business as Marketing & Promotion Services. To be a partnership, this association can result from an agreement that is

Accepted Answer

A partnership can be created by an express agreement, which is a written or oral agreement between two or more individuals to form a partnership. It can also be implied by the conduct of the parties, which is when the actions of the individuals show an intent to form a partnership. Therefore, the association between Bo and Clancy can result from either an express or implied agreement.

Quiz 19: The Entrepreneurs Options