Chapter 3

Question 1

A limited liability company (LLC) combines the tax characteristics of:

Answer 1

a. a corporation with the liability of a partnership.
b. a corporation with the liability of shareholders.
c. a partnership with the liability of partners.
d. a partnership with the liability a corporation. (Answer is D)

Question 2

The term used to designate a person who has an ownership interest in a LLC

Answer 2

Member(S)

Question 3

The document filed with a designated state official by which a LLC is formed

Answer 3

Articles of Incorporation

Question 4

A hybrid form of business enterprise that offers the limited liability of the corporation but the tax benefit of a partnership

Answer 4

LLC

Question 5

The Uniform Limited Liability Company Act (ULLCA) has now been adopted by almost all of the states.

Answer 5

False

Question 6

One of the great benefits of LLCs, and one that helps promote investment, is the fact that:

Answer 6

Foreign investors are allowed to become LLC members

Question 7

In an LLC, a member is someone who:

Answer 7

has an ownership interest in an LLC & limited liability for LLC debts

Question 8

When a group of members joint to form an LLC, the name of the organization must:

Answer 8

include the words “ limited liability company” or the letters LLC

Question 9

LLCs are legal entitles apart from their owners and as such can sue or be sued, enter into contracts, and hold title to property.

Answer 9

True

Question 10

Which of the following is NOT typically a part of the contents of an LLC’s articles of organization filed with the central state agency?

Answer 10

The hours of operation of the business

Question 11

Marsden wants to start a new company with different partners to explore oil-drilling opportunities in several states. When discussing the LLC form, Marsden’s attorney mentions that one of the biggest disadvantages of the LLC form is that:

Answer 11

there is nor uniform law governing LLC’s in the U.S.

Question 12

two options for management of an LLC.

Answer 12

1. Member managed

2. Manager Managed

Question 13

Xavier consults with his attorney about the management of his LLC. He has chosen the manager-managed LLC form of management in which:

Answer 13

the managers may be members, nonmembers, or a combination of both

Question 14

Typically, managers in a manager-managed LLC owe fiduciary duties to the

Answer 14

LLC & its members

Question 15

Generally, a dissociated member has no right to force the LLC to dissolve

Answer 15

True

Question 16

Upon the dissolution of the LLC, which member may participate in the winding up process?

Answer 16

Any members who did not wrongfully dissociate.

Question 17

Upon dissolution of an LLC, all assets must be sold immediately.

Answer 17

False

Question 18

An organizartion created by 2 or more persons in contemplation of a limtited activity or a single transaction: simliar to a partnership in many respects

Answer 18

Joint Venture

Question 19

An investment group that undertakes to finance a particular project; may be organized as a corporation or as a general of limitied partnership

Answer 19

Syndicate

Question 20

A business form similiar to a corporation in some respects( transferable shares of stock, mgmt by directors and officers , perpetual existence) but otherwise resmebling a partnership

Answer 20

Joint stock company

Question 21

A business form created by a written trust agreement that sets forth the interests of the beneficaries & the obligations and powers of the trustee(s)

Answer 21

Business trust

Question 22

An association organized to provide an economic service, without profit, to its memebers. A cooperative can take the form of a corporation or a partnership

Answer 22

Co-Operative

Question 23

A major difference between a joint venture and a partnership is that:

Answer 23

a joint venture is a one-time association, whereas a partnership is ongoing.

Question 24

A joint venture is a true cross between a partnership and a corporation.

Answer 24

False

Question 25

A joint stock company has many features of a corporation. Which of the following is NOT one of the ways in which a joint stock company is like a corporation?

Answer 25

Its shareholders have personal liability.