Stefan has opened a sole proprietorship bicycle shop. The business shows a net income of $100,000. Stefan took a salary of $40,000. The remaining money is left in the bank. Show A) At tax time, the business pays taxes on $100,000, and Stefan pays taxes on $40,000. B) At tax time, the business pays taxes on $140,000. C) At tax time, the business pays taxes on $70,000, and Stefan pays taxes on $70,000. D) At tax time, Stefan pays taxes on $140,000. Boris, Carina, and Theo have decided to go into business as a limited partnership importing and selling exotic spices. Boris and Carina will manage the business, and Theo will have no role in the day-to-day operations. Boris and Carina have each invested $500,000, and Theo has contributed the building and land that the business will be operated from. Alina, a customer, contracts a rare disease from a contaminated spice sold by the company and sues. Alina is awarded a judgment for $5 million. After she exhausts the assets of the partnership, having the property and building sold, and seizing all other property, $3 million remains unpaid. A) Boris, Carina, and Theo each owe $3 million jointly and severally, so Alina may sue one, two, or all three for the $3 million balance. B) Boris and Carina each owe $3 million jointly and severally, so Alina may sue one or both of them; Theo has no additional liability. C) Boris and Carina each owe $1.5 million, and Alina must sue each for his or her part; Theo has no additional liability. D) Boris, Carina, and Theo each owe $1 million, and Alina must sue each for his or her part. Recommended textbook solutions Human Resource Management15th EditionJohn David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine 249 solutions
The Cultural Landscape: An Introduction to Human Geography, AP Edition13th EditionJames M. Rubenstein 216 solutions
HDEV56th EditionSpencer A. Rathus 380 solutions Social Psychology10th EditionElliot Aronson, Robin M. Akert, Samuel R. Sommers, Timothy D. Wilson 525 solutions Which of the following is a legal entity separate from its owners? A. Limited partnership. Click the card to flip 👆 Terms in this set (15)One form of business organization is the limited liability company (LLC). In accordance with many state statutes, an LLC A. Must be for a specified term. Students also viewedSets found in the same folderOther sets by this creatorVerified questionsaccounting Verified answer business math Verified answer business math Verified answer Recommended textbook solutionsOther Quizlet setsLLC combine the limited liability of the partnership and the tax advantages of corporations. False LLC's are taxed as partnerships unless the owners choose to be taxed as a corporation. True A member of an LLC can never be personally liable for the debts of the
LLC. False Relative to corporate and partnership law there is not a comparble amount of case law involving LLCs. True In the majority of states an LLC can be both formed and managed by only one member. True
If you form an LLC you are required to have a written operating agreement. False In a memeber-managed LLC all members participate in management. True In a manager-managed LLC, only the manager-members have access to the LLCs books. True An artisan's lien is a special lien that applies exclusively to the liens artist receive on artwork they personally performed. False Bob voluntarily surrender's a watch that he repaird back to the owner. Bob had a lien on the property for the value of his labor. Bob later re-acquires the property. Bob has now revived his lien since he was able to re-acquire
possession of the property. False A suretyship provides a lien credit a legal interest in the property of the debtor to secure repayment of the loan. False A surety and guarantor have always been treated as the exact same thing. False A general guarantor's promise is not limited to a single transaction. True When dealing with an absolute guarantor, the creditor does not have to first attempt to collect from the debtor prior to proceeding against the guarantor. True Modernly, surety and
indemnification contracts are the same thing. False BOTH perforance bonds and fidelity bonds are sureties. True Surety agreements may also be created by operation of law. True The surety
relationship requires good faith, but not fair dealing. False A creditor can never be required to give the surety notice that the debtor is in default. False If a credit gets a judgment against the creditor, and then the surety pays the creditor, the surety gets to benefit from the judgement
that was obtained by the creditor. True Subrogation means the substitution of one person in place of another. True Lack of capacity and discharge in bankruptcy are two common defenses that are available to a surety that may be asserted against a creditor. False The Statute of Limitations does not apply to surety contracts. False The release of the principal always releases the surety. False A surety will remain liable when the creditor-principal agreement is modified if the surety consents to the modification Before the modification takes place Any of the above Bonding companies are usually uncompensated sureties. False A surety owes a ____ to the principal for any profits obtained after the surety performs. Duty to Account Duty to Account Co-sureties share joint and several liability to the creditor True If a judgment for dollar damages is not paid, the judgment creditor may apply for a ____ Writ of Execution Writ of Execution ____ is a proceeding by which a plaintiff seeks to reach the assets of the defendant that are in the hands of a third party. Garnishment Garnishment The owner may be liable for more than the contract price even if they
follow the statutory procedures. False Rod and Todd have joint and several liability as sureties on a loan made to Rod's business by First Bank. Under this agreement, Todd is a ____ . General Guarantor Co-surety A lien for the value of material and labor expended in the construction of buildings and other improvements is a ____ . Mechanic's lien Mechanic's lien The general contractor is eligible for a mechanic's lien on the real property, but the subcontractors on the project are not. True False The usual procedure for a party seeking to perfect a mechanic's lien to file or record a ____ in the office of the county in which deeds to real estate are recorded. Notice of lien Notice of lien State law determines whether or not a mortgage will have priority over a mechanic's lien. True
Because the LLC is a relatively new type of business entity, there are often fewer published court opinions addressing LLC issues. True The limited liability partnership is often an attractive option for professional associations such as law firms, accountants and medical doctors. True Which of the following is a quality that an LLC shares with a corporation? Members are only personally liable for debts to the extent of the money they put into the business. Members of an LLC usually have little to no control in major business decisions. An LLC and a corporation are treated identically for tax purposes. Both an LLC and a corporation require complex and costly procedures and filings before they can legally do business. Members are only personally liable for debts to the extent of the money they put into the business. Which of the following best describes the role of a general partner in a limited partnership? The general partner usually has an insignificant role in the overall business decisions of the limited partnership. The general partner defers to the business decisions of the limited partners of the limited partnership, unless those decisions seem economically unreasonable. The general partner may participate in the business decisions of the limited partnership, but he or she will never be held personally liable for the debts of the business. The general partner manages the partnership and remains responsible for partnership liabilities. The general partner manages the partnership and remains responsible for partnership liabilities. Individual members of an LLC may do all of the following, except: Bind the LLC in legally enforceable contracts. Voting on business personnel issues. Making capital contributions to the LLC. Using LLC funds to satisfy personal debts. Using LLC funds to satisfy personal debts. In a limited partnership, each limited partner has an equal right to participate in the management of the business. False California and New York allow only professional services firms to do business as Limited Liability Partnerships. True Persons who contract with the owner to furnish labor or material or construct a building are known as _________. Contractors. Subcontractors. Authorized agents. Mortgagees. Contractors A principal who is discharged in bankruptcy is released from his duty to reimburse the surety. True A sub-surety becomes liable to the creditor only when another surety fails to perform. True Restatement of Security treats contracts of suretyship as interchangeable with guarantor contracts. True The general contractor is eligible for a mechanic's lien on the real property, but the subcontractors on the project are not. False A ________ is a party who limits his or her promise to a single transaction or to a single creditor. General guarantor. Special guarantor. Creditor. Obligee. Special guarantor. The Statute of Limitations does not apply to surety contracts. False Which of the following parties could claim an artisan's lien? A common carrier of goods. A jeweler who repaired a watch The owner of a storage facility All of the above are eligible for an artisan's lien. All of the above are eligible for an artisan's lien A __________ is a party whose promise is not limited to a single transaction or to a single creditor. Guarantor An LLC in which non-owners are hired to run the day to day activities of the firm is a ______LLC. Member-managed Manager-managed Proprietary Subchapter S Manager-managed Absent an agreement otherwise, the members of an LLC have a statutory right to approve a merger dissolve the LLC inspect the books and records of the LLC all of the above are statutory rights all of the above are statutory rights One recognized advantage to a general partnership is that it allows partners to share in management and profits of the partnership. True An LLC that is managed by one or more of the owners is a ____________________LLC. Member-managed Manager-managed Proprietary Subchapter S Member-Managed A Limited Partnership must have ____________. At least one limited partner who participates in management decisions. An equal ratio of limited partners to general partners. At least one general partner. Equal capital contributions from both limited and general partners. At least one general partner To create a Limited Liability Corporation, articles of organization must be filed with the state's Secretary of State's office. True A limited partner has liability to the full extent of his or her capital contribution. True The two types of guaranty
agreements are general and special. True State courts have the power to order that real property be sold to satisfy a mechanic's lien. True A surety's obligation is a generally promise to do what the principal agreed to do. True A creditor must exhaust his or her judicial remedies against the principal before seeking to recover from the surety. False Mel, who owns a car repair shop, replaced the clutch in Ellen's car. Until Ellen pays for the repairs, Mel has a ______lien on the car. Artisan's Mechanic's Judicial Guarantor's Artisan's In which of the following business organizations does an owner risk losing his or her limited liability by actively and publicly managing the business? Limited Partnership Limited Liability Partnership General corporation Limited liability corporation Limited Partnership Limited Partnerships offer a convenient way for professional and family-owned
enterprises to do business. False In which of the following business forms are profits taxed at both the entity level and the owner level? General corporation Limited Partnership LLC LLP General Corporation Limited Liability Companies are one of the oldest forms of business
organization False Limited partnerships must have one general partner for every seven limited partners. False All of the following are considered advantages of doing business as an LLC, except: The LLC insulates its members from personal liabilities for the debts of the business. Members of the LLC may lawfully avoid filing personal tax returns with the IRS. The LLC can function much like a general partnership, while avoiding many of the risks of a general partnership. The LLC can provide its members voting rights that are proportionate to the members' capital contributions. Members of the LLC may lawfully avoid filing personal tax returns with the IRS. A security interest in personal property in favor of one who has performed services on the personal property is an ________. Mechanic's lien. Artisan's lien. Color of title. Security Deposit. Artisan's lien An artisan's lien is always assignable. False A creditor in possession of collateral
given to him or her by the principal may return it to the principal without the consent of the surety. False In a manager-membered LLC, an individual or small group has the authority to control and make decisions for the LLC. True Which of the following usually provides an investor the least protection from personal liability for the debts of the business? General Partnership Limited Partnership LLC Corporation General Partnership Which business entity has the following characteristics: owners are normally professionals engaged in selling their services; owners have both limited liability for the debts of the entity and limited liability for the contracts and torts of the other owner-professionals; the entity is organized under state law; profits are taxed only at the owner level? General partnership Limited partnership Limited Liability Partnership Limited Liability Company Limited Liability Partnership A creditor can assign a general guarantor's promise to a new creditor for value. True An "improvement" to real property necessarily increases the market value of the real property. False Limited Partnership must have at least one general partner. True In a Limited Partnership, the General Partner's fiduciary duty is ______. A duty to ensure all Limited Partners has an equal voice in partnership affairs and decisions. A duty to ensure that the General Partner optimizes his or her investment in the partnership. A duty of good faith and fair dealing to all partners in the partnership. A duty to minimize financial risks taken on by all Limited Partners in the partnership. A duty of good faith and fair dealing to all partners in the partnership. In a manager-managed LLC ___________. No one member of the LLC has authority to make business decisions on behalf of the LLC. An individual or small group has the authority to control and make decisions for the LLC. All members of the LLC participate equally in business decisions. The authority of the members of the LLC to make decisions is directly proportionate to the amount their capital contribution. An individual or small group has the authority to control and make decisions for the LLC. Individual members of the LLC can never bind the LLC in a valid and enforceable contract. False Any third party who promises a creditor to be liable for a principal's payment is either a surety or _________. Obligee. Guarantor. Principal Debtor Obligor. Guarantor. When a ________ is purchased, a bonding company promises to pay an employer any loss, not to exceed a stated amount, caused by the covered employees' embezzlement. Performance bond. Fidelity bond. Security agreement. Nonperformance bond. Fidelity bond. Misconduct
of the principal that induces a party to become a surety allows that surety to avoid the contract. False Modification of the creditor-principal agreement generally discharges the surety. True All of the following could be recognized as advantages of doing business as a limited partnership, except: A limited partnership allows limit partners to be liable only to the extent of their capital contribution. Limited partners can actively share in management of the partnership, without incurring the risks of business liabilities. Limited partners can invest in a partnership while effectively protecting their personal assets. A Limited Partnership is often a convenient and attractive option to investors. Limited partners can actively share in management of the partnership, without incurring the risks of business liabilities. All of the following are considered advantages to a Limited Liability Partnership, except: A limited liability partner is always insulated from personal liability of he or she commits malpractice. A limited liability partner can avoid personal liability for partnership debts. The limited liability partnership can function much like a general partnership, without the same risks of personal liability as a general partnership. Partnership proceeds may "pass through" the partnership for income tax purposes. A limited liability partner is always insulated from personal liability of he or she commits malpractice. The manager of a manager-managed Limited Liability Company may be a non-member. True A limited partner risks personal liability when he or she actively participates in the management of partnership affairs. True Jo and Anna, who are mother and daughter, are co-owners of Joanna's Frocks. When the bank loaned money to the business, Jo and Anna agreed to be sureties on the loan. Under the loan agreement, Anna will be liable only if Jo defaults on her obligation as a surety. Anna is a __________on the loan. General guarantor Special guarantor Co-surety Sub-surety Sub-surety In a _______, a creditor must have made reasonable but unsuccessful attempts to collect from the principal before the guarantor can be held liable. Absolute guaranty. Unconditional guaranty. Conditional guaranty. Satisfaction guaranty. Conditional guaranty. Both contractors and subcontractors are entitled to a mechanic's lien against the owner for nonpayment of their accounts. True Bob is a co-surety with Sue on a loan that was made to Sue's business. If the business defaults on the loan and Bob is required to pay the full amount, Bob has the right of ____________ against Sue. Reimbursement Indemnification Contribution Subrogation. Contribution Any profits which a surety makes when called upon to perform the principal's duties belong to the surety. False Contractors have a
longer period in which to file mechanic's liens that subcontractors or suppliers have. True Which business entity has the following characteristics: liability of the owners is limited to their investments; ownership interest is easily transferrable and there are no legal limits to the number of owners; owners elect the managers of the business who operate under duties of loyalty and due care; the entity is organized under state law and may have perpetual existence; profits are subject to double taxation? General Corporation Compared to other business entities, a general partnership requires filing complex documentation with the secretary of state's office before it is authorized to do business. false If
the formalities of creating a limited partnership are not met, a partnership will be treated by courts as a general partnership. true Which business entity has the following characteristics: one owner has unlimited personal liability for the debts of the business while other owners are liable only to the extent of their investments; owners lose their limited liability if they actively manage the business; the entity is organized under state law; both profits and loses pass through to the owners? General partnership Limited partnership Limited Liability Partnership Limited Liability Company Limited partnership Limited partners may lose the full amount their capital contribution if the limited partnership incurs debts that exceed its assets. True Which of the following is recognized as a disadvantage to doing business as an LLC? Existing court decisions addressing LLC issues and formation are relatively undeveloped, which may lead to legal uncertainty when making business decisions. Individual members of the LLC can never bind the LLC in a valid and enforceable contract. Compared to other business entities, the LLC is taxed more heavily by the IRS. An LLC requires the participation of several owners, which can sometimes complicate day-to-day business decisions. Existing court decisions addressing LLC issues and formation are relatively undeveloped, which may lead to legal uncertainty when making business decisions. State law requires that state chartered banks post bonds to protect the banks from losses caused by embezzlement by bank employees. The bonds posted by banks are __________bonds. Fidelity Performance Bank Fiduciary Fidelity The majority of states have not yet enacted Limited Liability Partnership enabling statutes. False A surety who only guarantees collection is entitled to notice. True Contracts of suretyship are legally indistinguishable from contracts of indemnity. False An LLC where a single person or select group has the power to manage is a ____________________LLC. Manager-managed Member-managed Proprietary Subchapter S Manager-managed A commonly cited disadvantage of an LLC is that its members often risk personal liability if the business of the LLC fails. True False false Under the "pass through" principle, a business entity Avoids double taxation Assigns assets of the business to a receiver. Delegates duties of the business to a subcontractor Conducts high risk activities through a subsidiary. Avoids double taxation Pearl sued Sam and was awarded a judgment against him for $50,000. Sam has a savings account with First Bank that can be seized in partial satisfaction of the judgment. The writ the court will use ordering First Bank to turn over to it the funds in Sam's account is a writ of____________. Attainder Attachment Garnishment Execution Attachment (Said it was wrong but i have no idea what else it could be) A(n) _______ is a legal proceeding accompanying an action in court by which a plaintiff may acquire a lien on a defendant's property as a security for the payment of any judgment that the plaintiff may recover. Attachment. Sheriff's sale. Meeting of creditors. Discharge in bankruptcy. attachment All of the following could be accurate statements about a general partnership, except: Partnership liabilities in a general partnership are limited to the amount of capital contribution. Which of the following would a represent a breach of fiduciary duty by a general to the limited partners in a limited partnership? The general partner uses certain partnership assets to secure a loan for a business venture that is not undertaken in the name of the partnership. In a Limited Liability Company, the unanimous consent of the members is required to hire a new employee. False An LLC must have at least two members that participate in management in order to lawfully do business False An extension of time of payment between a creditor and principal must be a valid agreement supported by ______ if it is to have an impact on the surety's liability. Consideration A surety is liable to the creditor as soon as the principal ________. (NOT FILES FOR BANKRUPTCY) or (ENTERS INTO THE CONTRACT) or (MAKES AN INITIAL PAYMENT) ONLY OTHER OPTION IS DEFAULTS If the principal does not default, the surety never becomes liable to the creditor. True A member of an LLC risk personal liability for participating in all of the following activities, except: The member consistently votes against decisions that are ultimately approved by the majority of other members of the LLC. A ________ provides security for a creditor without involving an interest in the property, where the security for the creditor is provided by a third person's promise to be responsible for the debtor's obligation. Suretyship Megan agreed to act as a surety on a personal loan First Bank made to Arthur. When Arthur defaulted on the loan, Megan paid off the loan obligation. Megan now has the right of ________against Arthur. Reimbursement In a suretyship, security for the creditor is provided by The promise of a third party to perform if the debtor does not perform. Which business entity has the following characteristics: the entity is organized under state law; the owners must declare to the state whether the organization will be managed by the owners or by persons hired by the owners; owners have limited liability for the debts of the entity; both profits and losses pass through to the owners? (NOT LIMITED PARTNERSHIP) Which of the following statements about the operation of a member-managed LLC is false? Only the managing members have access to the books and records of the LLC Which of the following is considered a disadvantage of doing business as a general partnership? All partners are/may be held liable for partnership debts A surety has no obligation to the creditor unless the principal _______. Fails to Perform A disadvantage of the Limited Liability Company is that profits are taxed both as income to the corporation and as dividends to the members. True In a limited partnership, a general partner's fiduciary duty is breached when limited partners are not permitted to participate in management. False In a Limited Partnership, a limited partners risk personal liability for partnership debts when __________. The limited partner becomes overly involved in partnership affairs. All of the following are rights held by an individual member of an LLC, except: The right to sell one's interest in the LLC without notifying or consulting the other members of the LLC. A limited partner normally has no liability beyond his or her contribution True A document that an LLC must submit to the secretary of state's office prior to doing business is ______. The Articles of Organization. A "certificate of limited partnership" is a document that is Filed with the state Secretary of State by the limited partnership as part of its application process. A lien for the value of materials and labor used in the construction or improvement of real property is an artisan's lien. False Paul sued Dan and won a $90,000 judgment against him. Paul has identified property belonging to Dan that would be used to satisfy the judgment. The order the court will give to the sheriff instructing him or her to seize and sell Dan's property is a writ of ________________. (NOT Attachment) Writ of ________ Attachment- order to seize an asset Edgar Esquire has an insurance contract with Lawyers Insurance Company which provides that Lawyers Insurance will pay any malpractice judgment against Edgar up to $3 million. The insurance contract between Edgar and Lawyers Insurance Company is one of __________. Indemnify Jason has filed suit against Luke claiming $50,000 in damages. While the claim is being litigated, Jason can ask the court for a writ to seize property belonging to Luke which could be used to satisfy a judgment. The seizure prevents Luke from selling or otherwise disposing of the property during the proceedings. The writ Jason will ask for is a writ of________________. (NOT Garnishment) Attachment The right of first refusal refers to the right of LLC members to Purchase the interest of another member in the LLC before it is offered to an outside buyer A limited partnership allows limited partners to be only liable for their capital contribution. True One of the disadvantages of a Limited Liability Partnership is double taxation. False A ________ promises to be liable to the creditor only in the event that the surety refuses to perform and thereby defaults. Subsurety A _______ provides protection against losses that may result from the failure of a contracting party to perform the contract as agreed. Performance bond Which of the following is a characteristic of a limited liability company LLC?Characteristics of limited liability company include separate legal existence, limited liability, flexibility in taxation, and simplicity in operation.
What are the characteristics of a LLP?Some of the key features of LLPs are:. They are a separate legal entity from their members.. They have the benefit of limited liability for their members.. They are taxed as a partnership.. They have the organisational flexibility of a partnership.. What is a characteristic of a limited liability partnership quizlet?What are the characteristics of a Limited Liability Partnership (LLP)? An LLP is taxed like a general partnership and the profits and tax liability pass through to the partners. Partners are personally liable for the partnership's debts and obligations, their own acts and acts of others under their supervision.
Which of the following is not a characteristic of a limited liability?Answer and Explanation: The correct option is (d) Moderate ability to raise capital. The shares of the limited liability companies are not traded on the stock exchanges. Therefore, these companies cannot acquire additional capital by issuing shares.
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Which of the following is a characteristic of limited liability companies LLCs )? Quizlet?
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