QUESTION: 61

Heather, Erika, and Shelby are members in ABC LLC. Heather works 40 hours per week and Erika and Shelby work 20 hours per week. Heather contributed $30,000 to the LLC and Erika and Shelby contributed $60,000 each. Erika and Shelby have each originated 45% of the LLC's business and Heather has originated the other 10%. Absent an agreement to the contrary among the owners, who controls the management of the ABC LLC?

Heather, because she works the most.
Erika and Shelby equally because they contributed the most.
Heather, Erika, and Shelby in proportion to their ownership interests.
Erika and Shelby, because they originate most of the work.

Answer(s): C

Explanation:

Choice "c" is correct.
Rule: Absent an agreement to the contrary, the members' voting strength is proportionate to their contributions. Choices "a", "b", and "d" are incorrect, per the above rule.

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QUESTION: 62

Heather, Erika, and Shelby are members in ABC LLC. Heather dies. Absent an agreement to the contrary, what is the result?

The LLC must dissolve.
The LLC ceases to exist.
The LLC is dissolved unless the other members consent to continue.
The LLC continues as though nothing happened.

Answer(s): C

Explanation:

Choice "c" is correct. Absent an agreement to the contrary, if a member of an LLC dies, the LLC is dissolved unless the other members consent to continue.
Choice "a" is incorrect, because the LLC does not have to dissolve upon the death of a member. Choice "b" is incorrect, because the LLC does not cease to exist immediately.
Choice "d" is incorrect, because the LLC does not continue unless the members consent to continue.

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QUESTION: 63

Heather, Erika, and Shelby are members in ABC LLC. Heather works 40 hours per week and Erika and Shelby work 20 hours per week. Heather contributed $30,000 to the LLC and Erika and Shelby contributed $60,000 each. Erika and Shelby have each originated 45% of the LLC's business and Heather has originated the other 10%. Absent an agreement to the contrary, how will the LLC's $120,000 profits be divided among the members?

Option A
Option B
Option C
Option D

Answer(s): D

Explanation:

Rule: Absent an agreement to the contrary, the LLC's profits will be divided among the members in proportion to their contributions. Here, Heather's, Erika's and Shelby's contributions were $30,000, $60,000, and $60,000, respectively. Thus, the profits will be divided in a 1:2:2 ratio (20% of $120,000 to Heather; 40% of $120,000 to Erika; and $120,000 to Shelby).

Choice "d" is correct.

Heather Erika Shelby
D. $24,000 $48,000 $48,000

Choices "a", "b", and "c" are incorrect, per the above rule.

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QUESTION: 64

A member of a limited liability company may generally do all of the following, except:

Transfer his membership in the company without the consent of the other members.
Participate in the management of the company absent an agreement to the contrary.
Have limited liability.
Order office supplies for the company.

Answer(s): A

Explanation:

Choice "a" is correct. The transfer of a member interest requires the consent of the other members. Members may not assign their interest without the other members' consent.
Choice "b" is incorrect. Unless the members have agreed to operate as a manager managed limited liability company, all members have the power to participate in management.
Choice "c" is incorrect. Members in a limited liability company all have limited personal liability. Choice "d" is incorrect. Unless otherwise agreed, members have the right to manage the everyday operations of a limited liability company. This can include the ordering of office supplies.

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Free CPA-Business Exam Braindumps (page: 16)

QUESTION: 61

Explanation:

QUESTION: 62

Explanation:

QUESTION: 63

Explanation:

QUESTION: 64

Explanation: