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Q:
Ken was a general partner in a limited partnership until March 2011, when he transferred all his transferable rights to his wife. A few days later, he was expelled from the limited partnership by other partners. If the limited partnership did not give any notice of dissociation, Ken will retain his apparent authority to transact for the limited partnership until:
A. 2012.
B. 2013.
C. 2014.
D. 2015.
Q:
What type of partner in a Limited Liability Limited Partnership (LLLP) contributes capital and manages the business.
A. General Partner
B. Limited Partner
C. Foreign Partner
D. Domestic Partner
Q:
If a limited partner becomes a general partner as well in a limited partnership:
A. her share of profits will go down.
B. she will lose her managerial powers.
C. she will lose her limited liability.
D. she will lose her right to receive profits.
Q:
A dissociated limited partner:
A. retains his right to receive profits.
B. retains his right to vote as a limited partner.
C. loses his limited liability status.
D. retains his managerial powers.
Q:
The limited partnership agreement of Davos Limited Partnership has no clause on partners who transfer their transferable interests. Davos is the only general partner of the limited partnership. There are five limited partners. Two of them transfer their transferable rights to their sons (one each). By consent of all the partners, the two transferees are also made partners. How many limited partners does Davos Limited Partnership now have?
A. 6
B. 7
C. 5
D. 3
Q:
Amanda and Sally are close friends who form a limited partnership to open a salon. They refuse to put a buyout clause for withdrawing partners in the limited partnership agreement, assuming that their friendship and business will last forever. Amanda, as a general partner, contributes $100,000 and Sally, as a limited partner, contributes $125,000. Two years later, Sally accuses Amanda of falsifying the data and withdraws from the limited partnership. How much will Sally receive from the limited partnership?
A. $125,000
B. $10,000
C. $100,000
D. $0
Q:
Under the default rules of the ULPA, a limited partner who wishes to withdraw from a limited partnership has:
A. the power but not the right to withdraw.
B. the right but not the power to withdraw.
C. neither the power nor the right to withdraw.
D. both the power and the right to withdraw.
Q:
Under the ULPA of 2001, a limited partner who participates in management and control of the limited partnership:
A. has unlimited liability to creditors of the limited partnership.
B. has limited liability only to those creditors with whom he has transacted businesses.
C. has unlimited liability only to those creditors with whom he has transacted business and who reasonably believe that he is a general partner.
D. has liability up to the limit of his capital contribution.
Q:
Jason believes that he is a limited partner in Yorktown Yankees Limited Partnership. Jason discovers that no limited partnership certificate has been filed with the secretary of state. What should he do?
A. Withdraw from the limited partnership by obtaining a refund of his capital contribution.
B. Cause a proper certificate of limited partnership to be filed with the secretary of state.
C. File with the secretary of state a limited partner certificate declaring his limited partner status.
D. Nothing. His status is not affected by the failure to file a limited partnership certificate.
Q:
Terrance and Barbara created a limited partnership, but inadvertently misstated its name in the certificate of limited partnership. How will their liability be affected by this?
A. The partners will have unlimited liability.
B. Only general partners will have limited liability.
C. Only general partners will have unlimited liability.
D. The partner contributing more will be held for liability.
Q:
Under the Uniform Limited Partnership Act (ULPA), a new partner may be admitted only upon the fulfillment of which of the following conditions?
A. Each partner's consent is required.
B. A written agreement is required.
C. The secretary of state's consent is required.
D. The Vote of the partners is required.
Q:
A limited partner's obligation to contribute capital may be enforced only by the:
A. general partners and the creditors of the limited partnership.
B. limited partners of the limited partnership.
C. limited partnership and the general partners.
D. limited partnership and creditors of the limited partnership.
Q:
Carol is the only general partner in ABC Limited Partnership. She contributes $50,000 in capital. Wayne and Hosek are the only limited partners. Wayne contributes $25,000 in capital, and Hosek contributes $25,000 in capital. ABC suffers a loss of $5,000. What is Hosek's share of the loss?
A. $1,250
B. $2,500
C. $5,000
D. $0
Q:
A limited partner in a limited partnership:
A. provides capital and shares profits.
B. is a fiduciary of the business.
C. has management powers.
D. possesses complete liability for its obligations.
Q:
With regard to an LLLP, a _____ is conclusive proof that a limited partnership exists.
A. Domicile Certificate
B. Certificate of Authority
C. Certificate of Incorporation
D. Certificate of Existence
Q:
As commonly occurs, a(n) _____ may be the sole general partner of a limited partnership.
A. association
B. natural person
C. corporation
D. trust
Q:
A limited partnership certificate must contain the:
A. partners' shares of profits.
B. signature of each general partner.
C. names of the limited partners.
D. capital contributions of the general partners.
Q:
A general partner in a limited partnership believes wrongly that an LLLP has been created. In such a case, which of the following will apply?
A. He will be considered a limited partner of the limited partnership.
B. He will lose his management powers over the limited partnership.
C. He will have to share profits equally with all other partners.
D. He will have unlimited liability for the obligations of the limited partnership.
Q:
Who is liable for the acts of the managers of the LLC?
A. Only the LLC itself
B. The organizers of the LLC
C. The members of the LLC
D. The incorporators of the LLC
Q:
The primary reason to choose the limited liability limited partnership instead of a limited partnership as a form of business is to:
A. create a tax shelter for the partners.
B. raise large amounts of capital.
C. limit the liability of all of its general partners.
D. relieve owners from managing the business.
Q:
Josh, Betty, and Danny formed an LLC to manage their accounting business. Josh contributed $20,000 to the LLC. Betty and Danny contributed $40,000 each. Being close friends, they did not include a profit and loss sharing plan in the operating agreement. A year later, they realize their working styles do not match. All the members agree to dissolve the LLC and sell all of its assets. Assuming that the LLC did not have any creditors and a total of $175,000 was obtained after the sale of all the assets of the dissolved LLC, how much will Betty get?
A. $100,000
B. $75,000
C. $50,000
D. $65,000
Q:
Nathan wrote a new software and named it "Black Mamba." To commercialize it, he formed an LLC (with a 50-year term) with his friend Pete. Two years later, Nathan withdrew from membership of the LLC since his and Pete's working styles did not match in any way. Under which of the following conditions can Nathan ask for a judicial dissolution of the LLC?
A. The LLC failed to purchase Nathan's interest within a week of his dissociation.
B. Since Nathan wrote "Black Mamba," Pete should not profit from it or the LLC.
C. Pete is using the profits from the LLC to sell a fake version of "Black Mamba."
D. The LLC failed to give fair value to Nathan for his transferable interest.
Q:
After all the assets of an LLC have been sold, the proceeds will be distributed first to LLC:
A. creditors.
B. founders.
C. transferees.
D. dissociated members.
Q:
Joshua, Rachel, and Daniel formed an LLC to manage their accounting business. Joshua contributed $20,000 to the LLC. Rachel and Daniel contributed $40,000 each. A year later, the LLC needed capital injection and Joshua lent a credit of $50,000. However, nothing could save the LLC and it entered bankruptcy and got dissolved. Joshua was the only creditor of the LLC. If a total of $50,000 was obtained after the sale of all the assets of the dissolved LLC, how much will Rachel get?
A. $0
B. $10,000
C. $50,000
D. $25,000
Q:
A member of an LLC is treated as a transferee of his/her transferable interest only after:
A. he/she transfers his/her transferable interest to another person.
B. he/she gives notices to third parties about the transfer.
C. a creditor receives his/her transferable interest.
D. his/her dissociation from the LLC due to judicial expulsion.
Q:
Which of the following is a nonwrongful kind of member dissociation from an LLC?
A. Dissociation caused by a member being a debtor in a bankruptcy.
B. Dissociation caused by a member's death due to a motor vehicle accident.
C. Dissociation caused by the judicial expulsion of a member.
D. Dissociation caused by a member withdrawing from an LLC before the LLC's term has expired.
Q:
A dissociating member will be liable to the LLC for damages caused by the dissociation due to:
A. the member being a debtor in a bankruptcy.
B. the member's death due to a motor vehicle accident.
C. a guardian being appointed over affairs of an Alzheimer-inflicted member.
D. the member withdrawing from the LLC after its term has expired.
Q:
Johnathan LLC has a term of eight years. It had only two partners, Jonathan and John, in its first five years of existence. It was not dissolved when John withdrew from membership in the sixth year. The LLC has continued its business and Johnathan has agreed to pay John, as per the provisions of the RULLCA. Consequently, Johnathan is obligated to pay John the value of his interest within:
A. 120 days after John's dissociation.
B. 90 days after John's dissociation.
C. 120 days after the end of the LLC's term.
D. 90 days after the end of the LLC's term.
Q:
The RULLCA allows for automatic dissolution of an LLC when:
A. a member of the LLC dies.
B. a majority of the members dissociate.
C. a member of the LLC goes bankrupt.
D. it becomes unlawful for the LLC business to continue.
Q:
Steve, Martha, and Pete formed an LLC two years ago. Steve has contributed $100,000, Martha has contributed $50,000, and Pete has contributed $50,000 to date to the LLC. The LLC made a profit of $30,000 in two years. By default, how much will Steve's share of profits be?
A. $10,000
B. $20,000
C. $15,000
D. $30,000
Q:
What is the document that is filed with the secretary of state to form an LLC?
A. Articles of Incorporation
B. Certificate of Organization
C. Operating Agreement
D. Bylaws
Q:
Marc and Sonia were the only members of the MS Limited Liability Company. Marc then sold all his rights in the LLC to Gertrude. As a result:
A. Gertrude becomes a member of the LLC.
B. Gertrude gains the right to receive Marc's share of distributions.
C. Marc ceases to be a member of the LLC.
D. the LLC becomes a sole proprietorship of Sonia.
Q:
Under the RULLCA, which of the following is true about a transferee in an LLC?
A. A transferee has the right to hire managers in a manager-managed LLC.
B. A transferee has limited rights to manage the ordinary business of the LLC.
C. A transferee has only a limited right to information about the LLC's accounts.
D. A transferee is a member of the LLC.
Q:
The LLC is not ordinarily liable for the wrongful acts of:
A. manager members in a member-managed LLC.
B. nonmanager members in a manager-managed LLC.
C. nonmanager members in a member-managed LLC.
D. manager members in a manager-managed LLC.
Q:
Which of the following is correct concerning a limited liability company?
A. It has limited ability to buy, hold, and sell property.
B. Typically, an LLC is a tax shelter for big corporations.
C. It is mandatory to have an operating agreement.
D. Members who manage an LLC are fiduciaries of the LLC.
Q:
Any of the managers in a manager-managed LLC may be removed at any time by a vote of:
A. one third of all LLC members.
B. two-thirds of all LLC members.
C. a majority of LLC members.
D. the board of directors.
Q:
A limited liability company:
A. is either member-managed or manager-managed.
B. shares its profits equally with shareholders.
C. is not required to pay federal income tax.
D. is owned only by shareholders.
Q:
A majority of the members of an LLC must agree for a plan to merger.
Q:
How are limited liability companies (LLCs) taxed?
A. They are always taxed the same as general partnerships.
B. They are always taxed the same as corporations.
C. They are taxed either as partnerships or as corporations, at the option of the LLC.
D. They are taxed either as partnerships or sole proprietorships, at the option of the LLC.
Q:
Which state passed the first limited liability company (LLC) statute in 1977?
A. Wyoming
B. Nevada
C. Montana
D. Nebraska
Q:
The owners of an LLC are called:
A. natural persons.
B. members.
C. partners.
D. managers.
Q:
Limited partners have the right to vote on partnership matters as a class.
Q:
In general, the ULPA does not grant partners much power to expel other partners from the partnership.
Q:
In a limited partnership, a general partner's liability is limited to his investments in the business.
Q:
One partner leaving a limited partnership will not cause the partnership to be dissolved.
Q:
A general partner in an LLLP will have unlimited liability if the LLLP was formed defectively.
Q:
A partner's transfer of his/her transferable interest has no effect on his/her status as a partner, absent a contrary agreement.
Q:
Each partner in a limited partnership owns an interest in the partnership. This is deemed his personal property.
Q:
Except for the liability of limited partners, limited partnerships and LLLPs are identical.
Q:
The death of a general partner causes dissolution of the limited partnership.
Q:
Losses of the business allocated to a limited partner in a limited partnership or an LLLP offset his income from any other sources.
Q:
A certificate of limited partnership must state the capital contributions of the limited partners.
Q:
A member's most important right within an LLC is to receive distributions.
Q:
Limited Liability Companies (LLC) are formed under federal law for international commerce purposes.
Q:
Owners of an LLC are called members.
Q:
In the absence of a decision by the members of an LLC, any member can demand the distribution of profits prior to the dissolution of the LLC.
Q:
After all the LLC assets have been sold, the proceeds will be distributed first to the partners.
Q:
Discuss a partner's authority to borrow money during winding up.
Q:
Karla retires from Orton Associates, a partnership. The business is continued by the remaining partners and Wes, a new partner who has agreed to assume Karla's liability for partnership obligations. Creditors have not been notified of Karla's retirement. What are Karla's and Wes's liabilities to the creditors?
Q:
A limited liability company may elect to pay no federal income tax.
Q:
An LLC member has no individual liability on LLC contracts, unless he/she also signs LLC contracts in his/her personal capacity.
Q:
Ordinarily, members of a limited liability company have limited right to manage the business of the LLC.
Q:
Mr. Green enters into a partnership with IT Doctors LLP. Mr. Green's capital investment into the business is $10,000. Shortly after joining the new business a client sues the IT Doctors LLP and wins a judgment of $750,000. How much is Mr. Green liable for?
A. $10,000
B. $100,000
C. $750,000
D. $0
Q:
Abraham, who is a partner in Adona's firm, has been declared a terrorist by the court following investigations of a criminal case. His partners at the firm want to expel him from partnership but they are not ready to give his interest in partnership. Is Abraham entitled to his interest in partnership?
Q:
Xavier, Yellie, and Zelda are partners of Koral Associates. The term of the partnership is 5 years, but Zelda withdraws after 1 year because she no longer wished to continue. Discuss the nature and consequences of Zelda's dissociation.
Q:
Discuss the rules of dissociation and dissolution for mining partnerships.
Q:
Poxabogue Associates, a partnership, is dissociated by the retirement of a partner. The business is continued by the remaining partners and a new partner, Enrica. What is Enrica's liability to creditors for partnership obligations that arose before she became a partner?
A. Enrica is liable to the extent of partnership assets.
B. Enrica is liable only if she agrees to assume the retired partner's liability.
C. Enrica is fully liable.
D. Enrica has no liability.
Q:
Which of the following is true about the effect of LLP statutes after appointment of a new partner?
A. RUPA provides that the new partner has full liability for the LLP's obligations.
B. The former partners will be personally responsible on committing a malpractice.
C. For obligations incurred before his admission, the new partner may not be held liable.
D. LLP partnership agreements often change the RUPA rule about a new partner's liability.
Q:
Which of the following is true about buyout of nonwrongfully dissociated partners?
A. The partnership may wait to buy out the partner until the end of the partnership's term.
B. The buyout price must deduct the interest from the date of dissociation.
C. The dissociated partner cannot ask the court to determine the buyout price.
D. The partner must be paid in cash within 120 days.
Q:
Bob was a partner in F & B Co., a partnership. Bob dissociated himself from it on June 1, 2000. On December 1, 2000, F & B Co. entered into a contract with Carey. Under which of the following scenarios may Bob be held liable to Carey, even though he is no longer a partner?
A. Bob files a Statement of Dissociation with the secretary of state.
B. Bob tells Carey on November 1, 2000 that he is no longer a partner.
C. The contract was entered into on the company's premises and Bob's name is still listed as a partner on the office door.
D. Bob files a Statement of Dissociation with the court.
Q:
In an LLP that is continuing business after dissociation:
A. a dissociated partner has high risk of continuing liability for contracts.
B. a dissociated partner has less risk of torts occurring before or after the partner leaves the LLP.
C. the partner's liability is limited beyond the LLP's assets.
D. the buyout payment made to a dissociated LLP partner will impair the ability of the LLP to pay its creditors.
Q:
Mark is a partner in Harbin Associates, a partnership. The term of the partnership agreement is one year and includes a clause on buyouts. After the term expires, Mark decides to dissociate while the remaining partners wish to continue. Under the RUPA:
A. the remaining partners must wind up and terminate the partnership.
B. they must buy out Mark of his interest on Mark's demand for the same.
C. they must not pay Mark the greater of the liquidation price or the sale price of the business.
D. they can renew their partnership agreement.
Q:
As per RUPA, if a nonwrongfully dissociated partner demands payment from the partnership, he should be paid:
A. within 90 days from the date of demand.
B. within 120 days from the date of demand.
C. within no such specified period.
D. within such time as per the terms and conditions of the partnership.
Q:
Carlita retires from Mortex Associates, a partnership. The business is continued by the remaining partners. What is Carlita's liability on debts incurred while she was a partner?
A. Carlita has liability to the extent of her capital contribution.
B. Carlita is fully liable.
C. Carlita has no liability.
D. Carlita has liability to the extent of partnership assets at the time of dissociation.
Q:
Ace Software Co. signed a deal with Gill Associates, a partnership, and has extended credit to it. Paul, a partner in Gill associates, retires but his partners continue the business. In order to release Paul from the debt owned to Ace, which of the following must occur?
A. The continuing partners must release Paul from liability on the debt.
B. Paul must not secure his release from Ace.
C. Paul has to contribute toward the debt as early as possible.
D. The continuing partners should volunteer to set off Paul's liability.
Q:
Which of the following is true about the liability of a dissociated partner for obligations incurred while a partner?
A. To complete the requirements for novation, a dissociated partner must also secure his release by the partnership's creditors.
B. Dissociated partners are not liable to partnership creditors for partnership liabilities incurred while they were partners.
C. Continuing partners must not indemnify dissociated partners from liability on partnership obligations.
D. A creditor's agreement to release an outgoing partner from liability may be implied, but usually it is express.
Q:
The RUPA makes a dissociated partner liable as a partner to a party that entered into a transaction with the continuing partnership, unless:
A. the other party believed the dissociated partner was still a partner.
B. the transaction was entered into more than two years after the partner has dissociated.
C. the transaction was entered into 90 days before the filing of a Statement of Dissociation with the secretary of state.
D. the other party was not made aware of the partner's dissociation.
Q:
Which of the following is true about asset distribution in an LLP?
A. If the LLP has been profitable, each partner will receive the net amount in his capital account.
B. The partners have liability for partnership obligations beyond the firms' assets.
C. An LLP partner has to contribute an amount equal to the negative balance in his account to pay creditors.
D. The creditors must sue the partner to force the partner to pay the debt.
Q:
Termination of a partnership occurs automatically after:
A. wrongful dissociation has occurred.
B. dissolution has occurred.
C. the assets of the partnership have been distributed.
D. the winding up process has begun.
Q:
Which of the following is true about successor's liability for predecessor's obligations?
A. Once continuation begins after dissociation, the creditors remain the creditors of the predecessor.
B. Partners may escape prior liabilities by forming new partnerships.
C. There has to be an agreement with creditors to eliminate liability for prior obligations.
D. The original partners are not liable for obligations incurred prior to dissociation.