BLAW EXAM #3

What is the process for collecting additional contributions from partners as necessary called?

A capital call.

Limited liability partnership (LLPs) are formed when a general partnership files _____ with the appropriate public official.

A statement of qualification.

Which of the following is true regarding the management and operation of a limited liability partnership (LLP)?

Although not required by statute, limited liability partnerships will frequently have a partnership agreement that sets out their management and operational structure.

Which of the following is true regarding taxation of a limited liability company?

An attractive advantage of the LLC model is the various tax treatment alternatives available to LLC members.

A _____ agreement allows the remaining partners to purchase the partnership interest of a _____ partner.

Buy-sell; withdrawing

In terms of factors to consider in choosing a business entity, issues such as how the business will fund its operations and whether the principal(s) may sell ownership rights in the business to raise money are related to the __________ factor.

Capitalization.

In terms of factors to consider in choosing a business entity, uses such as how the business will fund its operations and whether the principal(s) may sell ownership right in the business to raise money related to the _____ factor.

Capitalization.

What occurs when an individual member of a limited liability company (LLC) decides to exercise the right to withdraw from the organization?

Dissociation.

A partner's _____ contribution represents the initial _____ investment into the partnership made by each partner.

Equity; capital

Which of the following is a specific dissociation event according to the Revised Uniform Partnership Act (RUPA)?

Expulsion by the unanimous vote of the other partners.

A sole proprietorship cannot be terminated by an express act of the principal.

False

In every state, a limited liability company (LLC) is formed by filing the articles of incorporation with the designated public official in that state.

False

T/F: The most common type of corporation is a publicly held corporation.

False

Sixteen (16) states have adopted all or substantial portions of the model act known as the Revised Model Business Corporation Act (RMBCA).

False.

T/F: Sixteen (16) states have adopted all or substantial portions of the model act known as the Revised Model Business Corporation Act (RMBCA).

False.

A DBA name is sometimes known as a _____ name.

Fictitious

A corporation that transacts business in a state other than its state of incorporation is known as a(n) __________ corporation in the other state.

Foreign.

What are the factors will consider whether to pierce the corporate veil?

Inadequate capitalization the nature of the claim, evidence of fraud of wrongdoing, and failing to follow corporate formalities.

Which of the following is true regarding capitalization of the limited liability company?

LLCs are capitalized primarily though debt via lenders or commercial lenders or though the sale of equity ownership in the LLC itself.

In terms of factors to consider in choosing a business entity, issues such as how and by whom the business venture will be operated, whether the principals will be involved the day-to-day operations of the business, what duties the principals owe to the business and each other, how profits and losses will be split, and whether the remaining principals may continue to operate the business if a principal decides to leave the organization are related to the _____ factor.

Management and operation.

In a _____ limited liability company (LLC), a manager (or managers) generally has the day-to-day operational responsibilities, while the non-managing members typically are investors with the little input on the course of business taken by the entity except for major decisions (such as a merger).

Manager-managed.

In a __________ limited liability company (LLC), a named manager (or managers) generally has the day-to-day operational responsibilities, while the non-managing members typically are investors with little input on the course of business taken by the entity except for major decisions (such as a merger).

Manager-managed.

In a _____ limited liability company (LLC), the management structure of the entity is similar to that of a general partnership.

Member-managed.

In a __________ limited liability company (LLC), the management structure of the entity is similar to that of a general partnership.

Member-managed.

What occurs when an officer, director, or controlling shareholder has some personal financial stake in a transaction that the corporation is engaged in and the officer, director, or shareholder helps to influence the advancement of the transaction?

Self-dealing.

A partner who is not in a position to ,make a capital contribution may be forced to _____.

Sell his interest in the partnership.

A partner who is not in a position to make a capital contribution may be forced to _____.

Sell his interest in the partnership.

Who are the owners of the corporation?

Shareholders.

The easiest single-person ownership entity to form and maintain is a _____.

Sole proprietorship.

Generally, shareholders, directors, and officers of a corporation are insulated from personal liability in case the corporation runs up large debts or suffers some liability. What is the term for this liability protection?

The corporate veil.

From the principal's perspective, what is the chief disadvantage to the sole proprietorship as a business entity?

The unlimited personal liability of the principal for unpaid debts and liabilities of the business.

How are limited liability partnerships (LLPs) capitalized?

Through private lenders, through commercial lenders, or by a sale of partnership equity for ownership in the limited liability partnership (LLP) itself

A sole proprietorship is not subject to corporate income taxation, and no tax return is filed on behalf go the business.

True.

T/F: A sole proprietorship is not subject to corporate income taxation, and no tax return is filed on behalf of the business.

True.

Which of the following is true regarding venture capital and venture capital firms?

Venture capital firms and their principals usually insist on substantial control over the cooperation via its board of directors and even its officers.

Dissolution does not actually end the partnership, but instead triggers the process of __________.

Winding up.

When a partner no longer wishes to be a principal in the partnership, she may choose to leave the partnership. What term does the Revised Uniform Limited Partnership Act (RULPA) use to describe this act of separation?

Withdrawal.

Upon a dissociation from a limited liability company (LLC), the remaining members may __________.

choose to either continue the LLC or initiate dissolution of it

The Revised Uniform Limited Liability Company Act (RULLC) imposes personal liability in cases where authorized members consent to a(n) _____ made when the limited liability company (LLC) is _____.

improper distribution; insolvent