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Test 3 Ch. 31 Questions and Correct Answers (elaborations) with 100% Accurate , Verified , Latest fully Updated , 2024/2025 ,Already Passed , Graded A+, Complete solutions guarantee distinctions Rationales

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Test 3 Ch. 31 Questions and Correct Answers (elaborations) with 100% Accurate , Verified , Latest fully Updated , 2024/2025 ,Already Passed , Graded A+, Complete solutions guarantee distinctions Rationales

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  • August 3, 2024
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  • 2024/2025
  • Exam (elaborations)
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  • test 3 ch 31
  • test 3 ch 31 questions and correct answers elabo

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Test 3 Ch. 31
[a flow-through tax entity and limited liability] An LLC offers the limited liability of a
corporation and the tax status of a flow-through entity. As such, it is an extremely
useful form of organization often favored by entrepreneurs because it offers the best of
both worlds - limited liability and lower taxes. - ✔✔Limited liability companies offer the
best of both worlds:

[debt is generally the only source of generating capital.] The owner of a sole
proprietorship has limited options for financing her business. Debt is generally her only
source of working capital because she has no stock or memberships to sell. For this
reason, sole proprietorships work best for small businesses without large capital
needs. - ✔✔Sole proprietorships work best for small businesses because

[hold LLC members liable for the debts of the company] Limited liability is one of the
great advantages of an LLC. However, if members abuse their rights, a court may
remove their limited liability. This process is called piercing the company veil. A court
may pierce an LLC's veil if members: (1) fail to observe formalities, (2) commingle
100%
assets, (3) fail to provide adequate capital (in extreme cases), and (4) commit fraud. -
✔✔If a court pierces the LLC veil it

[the value of her partnership interest in Mother Goose] A partner cannot sell her share
of the organization without the permission of the other partners. She can only transfer
the value of her partnership interest, not the interest itself. She cannot, for example,
transfer the right to participate in firm management or vote on firm matters. - ✔✔Jane
is in debt to Jack, and is also a partner in Mother Goose, LLP. Jane may transfer to
Jack

a limited liability company. - ✔✔The business form that offers the limited liability of a
corporation and the tax status of a flow-through entity is

All of these choices are correct.
b. only "obtain the approval of a supermajority of shareholders" and "assess and
report regularly on its website about the company's societal and environmental impact".
c. agree to measure its social benefits using a standard set by an objective third party.

, d. assess and report regularly on its website about the company's societal and
environmental impact.
e. obtain the approval of a supermajority of shareholders. - ✔✔To become a socially
conscious organization, an enterprise typically must:

An LLC is not required to execute an operating agreement, but this document can be
exceedingly helpful, as Jeffrey Horning learned in the opening scenario to this chapter.
The flexibility of an LLC is both the good news and the bad. Members have great
choice in how to run their organization but they are also forced to live by their
(careless) choices if they have a bad operating agreement or none at all, because
courts are reluctant to interfere. Dr. Aibar Huatuco signed an operating agreement that
made it possible for either of the two members of the LLC to prevent the dissolution of
the LLC. Had he thought about the practical implications of this provision, he would
have realized that this may not serve his interests, as if the two become deadlocked
there is no way for either to exit the LLC. - ✔✔The Huatuco case demonstrates the
danger of

100%
an S corp shareholder - ✔✔Which of the following would NOT be personally liable for
the debts of the business?

Borrowing, Contributions from partners - ✔✔A partnership can raise capital in which of
the following ways?

Communities
Investors
Environment
Stakeholders - ✔✔A social enterprise must balance the interests of which of the
following when making business decisions?

Congress created S corporations (aka "S corps") to encourage entrepreneurship by
offering tax breaks. As with S corps, a goal of close corporation state statutes is to
[encourage entrepreneurship] by offering special treatment, such as removing the
requirement for certain formalities like formal bylaws and giving shareholders the
option to include in the charter a right of first refusal over shares. - ✔✔S corporations
and close corporations were both created to

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