LGS 200 EVALUATION TEST QUESTIONS AND
ANSWERS SET A+
✔✔Articles of Organization (LLC) - ✔✔the formal documents that must be filed at the
secretary of state's office of the state of organization of an LLC to form the LLC
✔✔Operating Agreement (LLC) - ✔✔an agreement entered into among members that
governs the affairs and business of the LLC and the relations among members,
managers, and the LLC
✔✔Certificate of Interest - ✔✔a document that demonstrates evidences of a member's
ownership interest in an LLC
✔✔Distributional Interest - ✔✔A member's ownership interest in an LLC that entitles the
member to receive distributions of money and property from the LLC.
✔✔Limited Liability of Members of LLCs - ✔✔The liability of LLC members for the LLC's
debts, obligations, and liabilities is limited to the extent of their capital contributions.
Members of LLCs are not personally liable for the LLC's debts, obligations, and
liabilities.
✔✔tortfeasor - ✔✔A person who intentionally or unintentionally (negligently) causes
injury or death to another person. A person liable to persons he or she injures and to the
heirs of persons who die because of his or her conduct.
✔✔Member-managed LLC - ✔✔An LLC that has not been designated as a manager-
managed LLC in its articles of organization. The LLC is managed by its members.
✔✔Manager-managed LLC - ✔✔An LLC that has designated in its articles of
organization that it is a manager-managed LLC. Nonmanager members give their
management rights over to designated managers, who manage the LLC.
, ✔✔duty of loyalty - ✔✔a duty owed by a member of a member-managed LLC and a
manager of a manager-managed LLC to be honest in his or her dealings with the LLC
and to not act adversely to the interests of the LLC
✔✔Limited Liability Partnership (LLP) - ✔✔A special form of partnership in which all
partners are limited partners, and there are no general partners.
✔✔articles of limited liability partnership - ✔✔The formal documents that must be filed
at the secretary of state's office of the state of organization of an LLP to form the LLP.
✔✔Limited Liability of Partners of LLPs - ✔✔The liability of LLP partners for the LLP's
debts, obligations, and liabilities is limited only to the extent of their capital contributions.
Partners of LLPs are not personally liable for the LLPs' debts, obligations, and liabilities.
✔✔Franchise - ✔✔an arrangement whereby one party (the franchisor) licenses another
party (the franchisee) to use the franchisor's intellectual property and business model in
the distribution of goods and services
✔✔franchisor (licensor) - ✔✔The party who grants the franchise and license to a
franchisee in a franchise arrangement
✔✔franchisee (licensee) - ✔✔the party who is granted the franchise and license by a
franchisor in a franchise arrangement
✔✔distributorship franchise - ✔✔A franchisor manufactures a product and licenses a
franchisee to distribute the product to the public
✔✔processing plant franchise - ✔✔A franchisor provides a secret formula or process to
the franchisee and the franchisee manufactures the product and distributes it to retail
dealers.
✔✔Chain-style franchise - ✔✔Franchisor licenses the franchisee to make and sell
products from a retail outlet in a certain geographic region
✔✔Area Franchise - ✔✔A franchisor authorizes a franchisee to negotiate and sell
franchises on its behalf in designated areas
The area franchisee is called a subfranchisor
✔✔Franchise agreement - ✔✔an agreement that a franchisor and franchisee enter into
that sets forth the terms and conditions of a franchise
✔✔Licensing - ✔✔A business arrangement that occurs when the owner of intellectual
property (the licensor) contracts to permit another party (the licensee) to use the
intellectual property.
ANSWERS SET A+
✔✔Articles of Organization (LLC) - ✔✔the formal documents that must be filed at the
secretary of state's office of the state of organization of an LLC to form the LLC
✔✔Operating Agreement (LLC) - ✔✔an agreement entered into among members that
governs the affairs and business of the LLC and the relations among members,
managers, and the LLC
✔✔Certificate of Interest - ✔✔a document that demonstrates evidences of a member's
ownership interest in an LLC
✔✔Distributional Interest - ✔✔A member's ownership interest in an LLC that entitles the
member to receive distributions of money and property from the LLC.
✔✔Limited Liability of Members of LLCs - ✔✔The liability of LLC members for the LLC's
debts, obligations, and liabilities is limited to the extent of their capital contributions.
Members of LLCs are not personally liable for the LLC's debts, obligations, and
liabilities.
✔✔tortfeasor - ✔✔A person who intentionally or unintentionally (negligently) causes
injury or death to another person. A person liable to persons he or she injures and to the
heirs of persons who die because of his or her conduct.
✔✔Member-managed LLC - ✔✔An LLC that has not been designated as a manager-
managed LLC in its articles of organization. The LLC is managed by its members.
✔✔Manager-managed LLC - ✔✔An LLC that has designated in its articles of
organization that it is a manager-managed LLC. Nonmanager members give their
management rights over to designated managers, who manage the LLC.
, ✔✔duty of loyalty - ✔✔a duty owed by a member of a member-managed LLC and a
manager of a manager-managed LLC to be honest in his or her dealings with the LLC
and to not act adversely to the interests of the LLC
✔✔Limited Liability Partnership (LLP) - ✔✔A special form of partnership in which all
partners are limited partners, and there are no general partners.
✔✔articles of limited liability partnership - ✔✔The formal documents that must be filed
at the secretary of state's office of the state of organization of an LLP to form the LLP.
✔✔Limited Liability of Partners of LLPs - ✔✔The liability of LLP partners for the LLP's
debts, obligations, and liabilities is limited only to the extent of their capital contributions.
Partners of LLPs are not personally liable for the LLPs' debts, obligations, and liabilities.
✔✔Franchise - ✔✔an arrangement whereby one party (the franchisor) licenses another
party (the franchisee) to use the franchisor's intellectual property and business model in
the distribution of goods and services
✔✔franchisor (licensor) - ✔✔The party who grants the franchise and license to a
franchisee in a franchise arrangement
✔✔franchisee (licensee) - ✔✔the party who is granted the franchise and license by a
franchisor in a franchise arrangement
✔✔distributorship franchise - ✔✔A franchisor manufactures a product and licenses a
franchisee to distribute the product to the public
✔✔processing plant franchise - ✔✔A franchisor provides a secret formula or process to
the franchisee and the franchisee manufactures the product and distributes it to retail
dealers.
✔✔Chain-style franchise - ✔✔Franchisor licenses the franchisee to make and sell
products from a retail outlet in a certain geographic region
✔✔Area Franchise - ✔✔A franchisor authorizes a franchisee to negotiate and sell
franchises on its behalf in designated areas
The area franchisee is called a subfranchisor
✔✔Franchise agreement - ✔✔an agreement that a franchisor and franchisee enter into
that sets forth the terms and conditions of a franchise
✔✔Licensing - ✔✔A business arrangement that occurs when the owner of intellectual
property (the licensor) contracts to permit another party (the licensee) to use the
intellectual property.
