Chapter 32 Review

Cindy and Ashley want to form a business entity that is a non-corporate business that limits liability for its owners, and allows for Cindy and Ashley to participate in the management of the company. Which business form should Cindy and Ashley adopt? a. a limited liability company. b. a limited partnership. c. a corporation. d. a general partnership.

a. a limited liability company.

Robert and Keith want to form a business entity with equal control and limited liability. They should form a: a. limited liability company. b. limited partnership. c. corporation. d. joint venture.

a. limited liability company.

Brody and Kris were the only member-managers of Computers4U, LLC. Computers4U, LLC is dissolving, and Brody and Kris wish to extinguish the company. Which of the following is not a step to extinguishing an LLC? a. Wind up or liquidation b. Filing a certificate of extinguishment with the state LLC office. c. Dissolution d. Termination

b. Filing a certificate of extinguishment with the state LLC office.

Which of the following is correct regarding a limited partnership? a. The general partner must make a capital contribution. b. It can only be created pursuant to statutory provisions. c. Limited partners are unable to vote on the incurrence of debt other than in the ordinary course of business under the safe harbor provisions of the RULPA. d. It can be created in such a way that the general partner has limited liability.

b. It can only be created pursuant to statutory provisions.

Which of the following is correct regarding the fiduciary duties in a limited partnership? a. A general partner has a fiduciary relationship to the limited partners, but not to any other general partners. b. Judicial authority seems to suggest that the limited partner has no fiduciary duty to the partnership. c. The fiduciary duty of the general partner has little effect upon the interests of the limited partners, because they have no ability to manage or control the partnership. d. All of these

b. Judicial authority seems to suggest that the limited partner has no fiduciary duty to the partnership.

Jill is a member of ABC LLC, and Sam is the manager. Which of the following aspects do they share in common? a. Financial interest. b. Liability. c. Control. d. Profit and loss sharing.

b. Liability.

Tony is a general partner of a limited partnership in which Alice and Mary are limited partners. Which of the following correctly states Tony's duties to Alice and Mary? a. Tony owes a duty of partnership to Alice and Mary. b. Tony owes a fiduciary duty to Alice and Mary. c. Tony owes a limited duty to Alice and Mary. d. None of these are correct.

b. Tony owes a fiduciary duty to Alice and Mary.

A company that is in a non-corporate business, limits liability for owners, and all members may participate in management is: a. a corporation. b. a limited liability company. c. a general partnership. d. a limited partnership.

b. a limited liability company.

A general partner of a limited partnership has a(n) __________ relationship to the general and limited partners. a. limited b. fiduciary c. foreign d. None of these are correct.

b. fiduciary

When were the last amendments made to the RULPA? a. 1976. b. 1985. c. 2001. d. 2005.

c. 2001.

Members of member-managed LLCs and manager-managed LLCs are the same in which of the following aspects? a. Control. b. Who has fiduciary duties. c. Liability. d. All of these are correct.

c. Liability.

Daniel is a general partner in a real estate investment firm. Hank and Barry are limited partners. Daniel, without the consent or ratification of Hank and Barry, can: a. admit another limited partner. b. not have almost exclusive managerial control of the business. c. act as an agent of the partnership. d. rename the partnership using Hank's last name.

c. act as an agent of the partnership.

A __________ is a partnership in which the liability of the general partners has been limited to the same extent as in a limited liability partnership. a. limited partnership b. limited liability company c. limited liability limited partnership d. None of these are correct.

c. limited liability limited partnership

Under the RULPA, if Jack contributed $1000 as a limited partner and signed a certificate, but the certificate was filed in the wrong office, Jack: a. cannot avoid liability as a general partner under any circumstances. b. may become a limited partner by giving constructive notice of the defective filing to all potential business contacts by an advertisement in a publication of general circulation. c. will not be liable as a general partner if he quickly withdraws from the business and renounces

c. will not be liable as a general partner if he quickly withdraws from the business and renounces future profits.

Dale and Wayne have a limited partnership. Dale and Wayne agree to allow Salim serve as a limited partner in the limited partnership, on the condition that he provide a contribution to the limited partnership. What may Salim use to fulfill this contribution requirement? a. Cash b. Property c. Services rendered d. All of these are correct.

d. All of these are correct.

Sue and Jesse formed a limited liability company, which sells electronics. Which of the following proposals may Sue and Jesse vote on related to the limited liability company? a. adopt or amend the operating agreement. b. sell all or substantially all of the limited liability company's assets prior to dissolution. c. merge the limited liability company with another limited liability company. d. All of these are correct.

d. All of these are correct.

Typically, members of a limited liability company have the right to vote on proposals to: a. adopt or amend the operating agreement. b. sell all or substantially all of the limited liability company's assets prior to dissolution. c. merge the limited liability company with another limited liability company. d. All of these are correct.

d. All of these are correct.

Jerry, Beaux and Nate want to form a business organization for their new accounting firm, and want to shield innocent owners from malpractice liability generated from other owners in the firm. Which type of entity should they form? a. General partnership. b. Limited partnership. c. Limited liability company. d. Limited liability partnership.

d. Limited liability partnership.

Which of the following need NOT be included in the certificate filed by a limited partnership? a. The name and business address of each general partner. b. The name and address of the agent for service of process. c. The name of the limited partnership. d. The names and addresses of each of the limited partners.

d. The names and addresses of each of the limited partners.

The __________ of a partner may be cash, property, services rendered, a promissory note, or an obligation to contribute cash or property or to perform services. a. assets b. capital c. liabilities d. contribution

d. contribution