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Free CPA-Business Exam Braindumps (page: 15)

Page 15 of 132
PDF with 530 Questions

Eller, Fort and Owens are members of ABC, LLC. XYZ Corp. brought a breach of contract suit against ABC for a contract executed by Eller as an agent of the LLC. If XYZ prevails, XYZ will generally be able to collect the judgment from:

  1. The LLC's assets only.
  2. The personal assets of Eller, Fort and Owens jointly.
  3. Eller's personal assets only after LLC assets are exhausted.
  4. Eller's personal assets only.

Answer(s): A

Explanation:

Choice "a" is correct.
Rule: Members of an LLC are not personally liable for the LLC's obligations. Moreover, an agent is not liable on a contract the agent enters into on behalf of a disclosed principal. Here, the contract was entered into by Eller on behalf of Venture, an LLC, and Eller disclosed that he was acting only as an agent of Venture. Thus, Trent Corp. can collect from the LLC'S assets only.
Choices "b", "c", and "d" are incorrect, per the above rule.



Tim, Peter, and Rick want to form a limited liability company. What document must they file with the state?

  1. Operating Agreement.
  2. Articles of Incorporation.
  3. Bylaws.
  4. Articles of Organization.

Answer(s): D

Explanation:

Choice "d" is correct. The Articles of Organization must be filed with the secretary of state.
Choice "a" is incorrect. An operating agreement is an agreement between the members containing provisions relating to management, profit sharing, transferring interests, etc. and does not need to be filed with the state. Choices "b" and "c" are incorrect. Articles of incorporation and bylaws are documents relating to corporations, and they are not required to be filed with the state.



The articles of organization for a limited liability company must contain everything, except the following:

  1. The name of the entity that includes some indication it is a LLC.
  2. The name and address of the registered agent.
  3. Number of shares authorized and issued.
  4. If the company is to be manager managed, a statement to that effect.

Answer(s): C

Explanation:

Choice "c" is correct. Limited liability companies do not issue "shares" held by shareholders like in a corporation. Instead, members (the owners) are said to have "interests" in the LLC.
Choices "a", "b", and "d" are incorrect. These are all required to be included in the articles of organization.



Unless there is an agreement to the contrary, the voting power of members in a limited liability company is determined by:

  1. Each member's salary.
  2. Each member's share of profits.
  3. When the member was admitted to the company.
  4. Each member's capital contribution.

Answer(s): D

Explanation:

Choice "d" is correct.
Rule: Absent an agreement otherwise, all members generally participate in management, and their voting strength is determined in proportion to ownership interest. This is calculated by comparing each member's capital contribution to that of the other members.
Choices "a", "b", and "c" are incorrect, per the above rule.



Page 15 of 132



Post your Comments and Discuss AICPA CPA-Business exam with other Community members:

Venkatesh commented on September 08, 2023
I don't see Internal Control/Information technology related questions
UNITED STATES
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Jay jain commented on May 25, 2023
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