Which type of law primarily governs limited liability companies?
Common law
Federal law
State law
Both state and federal law - CORRECT ANSWER-State law
When winding up a limited liability company (LLC), who would be paid first from the sales
proceeds?
Members who are creditors of the LLC
Members for their capital contributions
Members for their equal shares
Members in accordance with the operating agreement - CORRECT ANSWER-Members who are
creditors of the LLC
For which circumstance may an individual be personally liable for actions of a limited liability
company (LLC)?
Member personally guarantees a business loan
Customer sues LLC for negligence
Member manages daily activities of the LLC
LLC is taxed as a C corporation - CORRECT ANSWER-Member personally guarantees a business
loan
Partners 1, 2, and 3 execute a partnership agreement, contributing 51%, 39%, and 10%,
respectively. The agreement is silent on voting between the partners. Under the Uniform
Partnership Act (UPA), how will these partners' votes be counted?
, Partner 1's vote will count five times as much as Partner 3.
Partner 3 will not be able to vote because he lacks a 25% interest.
Partners 2 and 3 cannot outvote Partner 1 because their cumulative interests are less than 50%.
Partners 1, 2, and 3 will have onl - CORRECT ANSWER-Partners 1, 2, and 3 will have only one
vote.
A corporation wants to conduct business in a state other than the state of its formation. Which
filing gives the corporation the right to conduct business in a state other than the state of its
formation?
Certificate of authority
Certificate of formation
Articles of incorporation
Articles of organization - CORRECT ANSWER-Certificate of authority
A father and son want to formalize their family cattle ranching operations into a legal business
entity. They want the business entity to offer liability protection and perpetual existence as well
as have a flow-through status for tax purposes. Which business entity is appropriate for this
situation?
S corporation
C corporation
General partnership
Sole proprietorship - CORRECT ANSWER-S corporation
Which event can cause an agency authority to terminate by the operation of law?
Common law
Federal law
State law
Both state and federal law - CORRECT ANSWER-State law
When winding up a limited liability company (LLC), who would be paid first from the sales
proceeds?
Members who are creditors of the LLC
Members for their capital contributions
Members for their equal shares
Members in accordance with the operating agreement - CORRECT ANSWER-Members who are
creditors of the LLC
For which circumstance may an individual be personally liable for actions of a limited liability
company (LLC)?
Member personally guarantees a business loan
Customer sues LLC for negligence
Member manages daily activities of the LLC
LLC is taxed as a C corporation - CORRECT ANSWER-Member personally guarantees a business
loan
Partners 1, 2, and 3 execute a partnership agreement, contributing 51%, 39%, and 10%,
respectively. The agreement is silent on voting between the partners. Under the Uniform
Partnership Act (UPA), how will these partners' votes be counted?
, Partner 1's vote will count five times as much as Partner 3.
Partner 3 will not be able to vote because he lacks a 25% interest.
Partners 2 and 3 cannot outvote Partner 1 because their cumulative interests are less than 50%.
Partners 1, 2, and 3 will have onl - CORRECT ANSWER-Partners 1, 2, and 3 will have only one
vote.
A corporation wants to conduct business in a state other than the state of its formation. Which
filing gives the corporation the right to conduct business in a state other than the state of its
formation?
Certificate of authority
Certificate of formation
Articles of incorporation
Articles of organization - CORRECT ANSWER-Certificate of authority
A father and son want to formalize their family cattle ranching operations into a legal business
entity. They want the business entity to offer liability protection and perpetual existence as well
as have a flow-through status for tax purposes. Which business entity is appropriate for this
situation?
S corporation
C corporation
General partnership
Sole proprietorship - CORRECT ANSWER-S corporation
Which event can cause an agency authority to terminate by the operation of law?
