CLA/CP Exam FREE CLA/CP Business Organization Types Questions and Answers 3

Question 1

What is the primary legal document used to establish the rights and obligations among members of an LLC?

Accepted Answer

Operating agreement

Answer

Certificate of formation

Answer

Partnership deed

Answer

Corporate charter

Question 2

Which type of business organization allows professionals such as attorneys and accountants to limit personal liability while practicing together?

Accepted Answer

Professional limited liability company (PLLC)

Answer

General partnership

Answer

Sole proprietorship

Answer

Business trust

Question 3

In a general partnership, how are profits distributed among partners when there is no written partnership agreement?

Accepted Answer

Equally among all partners

Answer

Based on each partner's capital contribution

Answer

Based on the number of hours each partner works

Answer

At the discretion of the managing partner

Question 4

What legal concept allows a corporation to exist independently from its shareholders, with its own rights and liabilities?

Accepted Answer

Separate legal entity doctrine

Answer

Vicarious liability

Answer

Agency by estoppel

Answer

Respondeat superior

Question 5

Which filing is required to form a limited partnership in most states?

Accepted Answer

Certificate of limited partnership

Answer

Articles of incorporation

Answer

Operating agreement

Answer

Statement of qualification

Question 6

What is the legal consequence when a court decides to 'pierce the corporate veil'?

Accepted Answer

Shareholders become personally liable for corporate debts

Answer

The corporation loses its business license

Answer

The corporation must convert to a partnership

Answer

Corporate officers are automatically removed