unit 8 ch 32

Assume the football team is set up as a limited liability company (LLC) and that Lenny, Sarah, and Sam are the owners of the LLC. The articles of organization specify that it is a member-managed firm. Which of the following statements is true in regards to the management of the firm, such as the decision of whether to fire the quarterback? The members would elect a group of managers, taken only from the LLC members, to manage the firm. The members would designate a group of only non-member managers to manage the firm. All of the members would have a vote on management decisions. The members would designate a group of members, non-members, or a combination of both, to manage the firm.

All of the members would have a vote on management decisions.

Assume the football team is set up as a limited liability company (LLC), that Lenny, Sarah, and Sam are the owners of the LLC, and it is a member-managed firm. Which of the following is incorrect? The profits from the team would pass through to the partners unless the LLC chooses to be taxed as a corporation. If any of the members were to act as a manager of the business, they would not lose their limited liability protection. The company must be formed through compliance with state statutes. Distribution of the profit among the partners would be determined by statute, even if it was spelled out in the LLC agreement.

Distribution of the profit among the partners would be determined by statute, even if it was spelled out in the LLC agreement.

Assume the football team is set up as a limited liability company (LLC) and that Lenny, Sarah, and Sam are the owners of the LLC. Which of the following statements is true? The LLC is always taxed like a partnership. The LLC can choose to be taxed like a corporation or like a partnership. The LLC is always taxed like a corporation. Neither the LLC nor its members pay tax on profits earned by it.

The LLC can choose to be taxed like a corporation or like a partnership.

Assume the football team is set up as a limited liability company (LLC) and that Lenny, Sarah, and Sam are the owners of the LLC. The team is sued for negligence because an individual who turned to see the quarterback running naked crashed her car. Which of the following is true? The LLC may have liability, but not the individual owners. The LLC may have liability, as well as the owners individually, and the owners' liability is unlimited. The individual owners may have liability, but not the LLC itself. The LLC may have liability, as well as the owners individually, but the owners' individual liability is limited to twice their investment in the company.

The LLC may have liability, but not the individual owners.

Assume the football team is set up as a limited liability company (LLC) and that Lenny, Sarah, and Sam are the owners of the LLC. The articles of organization specify that it is a manager-managed firm. Which of the following statements is true in regards to management of the firm, such as the decision of whether to fire the quarterback? All of the members would have a vote on management decisions. The members would elect a group of managers, taken only from the LLC members, to manage the firm. The members would designate a group of members, non-members, or a combination of both, to manage the firm. The members would designate a group of only non-member managers to manage the firm.

The members would designate a group of members, non-members, or a combination of both, to manage the firm.

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

a. Liability

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. contribution b. capital c. assets d. liabilities

a. contribution

In Alzado v. Blinder, Robinson & Company, Inc., Blinder, Robinson & Co. was found: a. not liable to partnership creditors as a general partner because it only engaged in a few promotional activities that did not rise to the level of management or control of the partnership. b. liable to the partnership creditors as a general partner because it required the formation of the limited partnership, and as a result it was deemed to be a general partner. c. not liable, because by only putting up the letter of credit and requiring Alzado to sign a personal guaranty, it was not a true partner. d. liable to partnership creditors as a general partner because it assumed control of the business and thus lost its limited partnership status.

a. not liable to partnership creditors as a general partner because it only engaged in a few promotional activities that did not rise to the level of management or control of the partnership.

The court in Wyler v. Feuer stated that: a. the general partner owes the limited partners a duty of reasonable care in the management of the business. b. the general partner may be held liable to the limited partner for any mistakes made or losses incurred in management of the business. c. a limited partner's liability can exceed his investment. d. a limited partner has a limited right to manage and control the partnership business.

a. the general partner owes the limited partners a duty of reasonable care in the management of the business.

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. Termination b. Filing a certificate of extinguishment with the state LLC office. c. Dissolution d. Wind up or liquidation

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

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 are correct.

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

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 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

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.

b. limited liability company

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

b. limited liability company.

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

c. 2001.

Which of the following is correct regarding a limited partnership? a. The general partner must make a capital contribution. b. It can be created in such a way that the general partner has limited liability. c. It can only be created pursuant to statutory provisions. d. 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.

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

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.

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. Limited partnership. b. General partnership. c. Limited liability partnership. d. Limited liability company.

c. Limited liability partnership.

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

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

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

c. a limited liability company.

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. not have almost exclusive managerial control of the business. b. rename the partnership using Hank's last name. c. act as an agent of the partnership. d. admit another limited partner.

c. act as an agent of the partnership

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.

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 partnership. b. a corporation. c. a general partnership. d. a limited liability company.

d. a limited liability company.

Assume the football team is set up as a limited liability company (LLC) and that Lenny, Sarah, and Sam are the owners of the LLC. Lenny, Sarah and Sam are properly referred to as: members. shareholders. limited partners. partners.

members.