Question 1

Because the activities of a partnership are more limited than the business of a joint venture, the members of a joint venture are presumed to have more power to bind their co-venturers.

Accepted Answer

A) True 
 B)False

Question 2

The management of a limited liability company must include at least one of the members.

Accepted Answer

A) True 
 B)False

Question 3

In a joint stock company, the shareholders are considered to be agents of one another, as the partners are in a partnership.

Accepted Answer

A) True 
 B)False

Question 4

To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likely to hold Nicole

Accepted Answer

A)   personally absolved.
B)   personally liable.
C)   liable but only to the extent of the member's investment in the firm.
D)   liable but only to the extent of any amount that the firm cannot pay.E) A) and D)
F) A) and C)

Question 5

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Accepted Answer

A)   a business trust.
B)   a joint stock company.
C)   a joint venture.
D)   a syndicate.E) All of the above
F) A) and D)

Question 6

In most situations, with respect to a limited liability company's debts, the firm's members are shielded from

Accepted Answer

A)   all personal liability.
B)   no personal liability.
C)   the loss of their capital investment in the firm.
D)   liability for conduct that leads to a piercing of the "corporate veil."E) A) and B)
F) All of the above

Question 7

If a limited liability company is not meeting the economic purpose for which it was established, a court may order the dissolution of the firm.

Accepted Answer

A) True 
 B)False  True

Question 8

A group of consumers form Grocers Mart Cooperative. This form of business organization makes it possible for these consumers to

Accepted Answer

A)   avoid personal liability for the acts of the cooperative.
B)   obtain an exemption from the state laws governing corporations.
C)   pay no taxes on their business income.
D)   pool their resources to gain an advantage in the marketplace.E) A) and B)
F) None of the above D

Question 9

A limited liability company is an aggregate of its members, not a separate legal entity.

Accepted Answer

A) True 
 B)False

Question 10

Accounting LLC is a member-managed limited liability company. Unless the members have agreed otherwise, all decisions with respect to the firm's business are made by

Accepted Answer

A)   majority vote.
B)   the firm's board.
C)   the senior members.
D)   the firm's chief executive officer.E) B) and C)
F) B) and D)

Question 11

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

Accepted Answer

A)   as an aggregate of its owners.
B)   only through its owners
C)   as a legal entity apart from its owners.
D)   only in conjunction with its owners.E) None of the above
F) A) and C)

Question 12

A business organizational form that limits its owners' liability allows the firm to lawfully

Accepted Answer

A)   act recklessly.
B)   engage in misconduct.
C)   take risks.
D)   all of the choices.E) A) and B)
F) A) and C)

Question 13

Most states apply to a limited liability company formed in another state the law of the state in which the firm currently does most of its business.

Accepted Answer

A) True 
 B)False

Question 14

In most circumstances, the manager of a limited liability company is liable in that capacity for the liability of the firm.

Accepted Answer

A) True 
 B)False

Question 15

Trans-Pacific Company and USA Export, Inc., form a business organization to engage in importing and exporting. Its assets are held in the names of the members and its shareholders have personal liability. This organization is

Accepted Answer

A)   a business trust.
B)   a joint stock company.
C)   a joint venture.
D)   a syndicate.E) B) and C)
F) C) and D)

Question 16

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Accepted Answer

A) True 
 B)False

Question 17

Organizing as a limited liability company prevents the firm from attracting foreign investors.

Accepted Answer

A) True 
 B)False  False

Question 18

With respect to taxes imposed on limited liability companies, most states

Accepted Answer

A)   follow the federal rules.
B)   exempt the firms from federal taxes.
C)   permit the firms to choose whether to follow the federal rules.
D)   offer a hybrid tax regime.E) C) and D)
F) A) and C)

Question 19

In some states, to form a limited liability company, a business must have

Accepted Answer

A)   a registered promoter.
B)   a designated founder.
C)   at least two members.
D)   a non-member manager.E) None of the above
F) A) and B)

Question 20

Croissants Corporation and Donuts Company transfer their assets to Edibles Inc., which manages the assets and distributes the profits to Croissants and Donuts. This arrangement is

Accepted Answer

A)   a business trust.
B)   none of the choices.
C)   a joint venture.
D)   a syndicate.E) A) and D)
F) A) and B)

Exam 32: Limited Liability Companies and Special Business Forms

Because the activities of a partnership are more limited than the business of a joint venture, the members of a joint venture are presumed to have more power to bind their co-venturers.

Correct AnswerverifiedShow Answer

The management of a limited liability company must include at least one of the members.

Correct AnswerverifiedShow Answer

In a joint stock company, the shareholders are considered to be agents of one another, as the partners are in a partnership.

Correct AnswerverifiedShow Answer

To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likely to hold Nicole

Correct AnswerverifiedShow Answer

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Correct AnswerverifiedShow Answer

In most situations, with respect to a limited liability company's debts, the firm's members are shielded from

Correct AnswerverifiedShow Answer

If a limited liability company is not meeting the economic purpose for which it was established, a court may order the dissolution of the firm.

Correct AnswerverifiedTrue

A group of consumers form Grocers Mart Cooperative. This form of business organization makes it possible for these consumers to

Correct AnswerverifiedD

A limited liability company is an aggregate of its members, not a separate legal entity.

Correct AnswerverifiedShow Answer

Accounting LLC is a member-managed limited liability company. Unless the members have agreed otherwise, all decisions with respect to the firm's business are made by

Correct AnswerverifiedShow Answer

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

Correct AnswerverifiedShow Answer

A business organizational form that limits its owners' liability allows the firm to lawfully

Correct AnswerverifiedShow Answer

Most states apply to a limited liability company formed in another state the law of the state in which the firm currently does most of its business.

Correct AnswerverifiedShow Answer

In most circumstances, the manager of a limited liability company is liable in that capacity for the liability of the firm.

Correct AnswerverifiedShow Answer

Trans-Pacific Company and USA Export, Inc., form a business organization to engage in importing and exporting. Its assets are held in the names of the members and its shareholders have personal liability. This organization is

Correct AnswerverifiedShow Answer

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Correct AnswerverifiedShow Answer

Organizing as a limited liability company prevents the firm from attracting foreign investors.

Correct AnswerverifiedFalse

With respect to taxes imposed on limited liability companies, most states

Correct AnswerverifiedShow Answer

In some states, to form a limited liability company, a business must have

Correct AnswerverifiedShow Answer

Croissants Corporation and Donuts Company transfer their assets to Edibles Inc., which manages the assets and distributes the profits to Croissants and Donuts. This arrangement is

Correct AnswerverifiedShow Answer

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True

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D

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False

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