True/False
Indicate whether the
statement is true or false.
|
|
|
1.
|
Limited liability companies are virtually identical
to limited partnerships.
|
|
|
2.
|
Unlike limited partnerships, members of limited
liability companies are not allowed to pass through business losses to their individual income tax
returns.
|
|
|
3.
|
Limited liability companies are creatures of the
common law.
|
|
|
4.
|
When a member in a limited liability company
withdraws from the company, he or she is entitled to a return of the original
contribution.
|
|
|
5.
|
A member of the limited liability company may lose
his or her membership by declaring personal bankruptcy.
|
|
|
6.
|
When a member dies, his or her membership in a
limited liability company dies with him.
|
|
|
7.
|
Members of limited liability companies are not
allowed to transfer their interest to other members.
|
|
|
8.
|
States have very strict requirements about what
constitutes an operating agreement for a limited liability company.
|
|
|
9.
|
The best practice for individuals considering
creating a limited liability company is to have an attorney draft the operating
agreement.
|
|
|
10.
|
Members are permitted to vote on the company's
policies.
|
Multiple Choice
Identify the
choice that best completes the statement or answers the question.
|
|
|
11.
|
The general business agreement between members and
managers of a limited liability company.
a. | Consent decree | b. | Operating agreement | c. | Contractual
stipulation | d. | Membership
contract |
|
|
|
12.
|
The document that sets up the organization, powers,
duration, and other questions concerning the running of the limited liability company.
a. | Articles of incorporation | b. | Articles of organization | c. | Articles of
dissolution | d. | None of the
above |
|
|
|
13.
|
Which of the following words or letters must appear
in the name of a limited liability company?
|
|
|
14.
|
Which office on the state level has the
responsibility for tracking and documenting limited liability companies?
a. | Department of Labor | b. | Office of Workers’ Compensation | c. | Mayor's office | d. | Secretary of
State's office |
|
|
|
15.
|
The source of authority for the creation and
running of the limited liability company?
a. | Local ordinances | b. | Zoning rules and regulations | c. | The state constitution | d. | State
statutes |
|
|
|
16.
|
In past decades, some limited liability companies
ran into trouble with this governmental agency.
a. | Department of Agriculture | b. | Internal Revenue Service | c. | Department of
Health and Human Services | d. | Federal Bureau of
investigation |
|
|
|
17.
|
The term for the persons who invest in a limited
liability company.
a. | Associates | b. | Partners | c. | Marketers | d. | Members |
|
|
|
18.
|
The persons responsible for running the day-to-day
operation of a limited liability company.
a. | General partners | b. | Limited partners | c. | Managers | d. | Members |
|
|
|
19.
|
Which state originated the concept of the limited
liability company?
a. | New York | b. | Washington | c. | Florida | d. | Wyoming |
|
|
|
20.
|
Unlike the general partners in a limited
partnership, managers of a limited liability company enjoy what legal protection?
a. | Immunity from prosecution | b. | Privilege against civil suits | c. | Limited liability | d. | All of the
above |
|