Homework answers / question archive / Question 1 1 / 1 pts In which type of business entity can ONLY business assets can be used to satisfy a tort or contract judgment against the business and its owners; the personal assets of the owners cannot be used to satisfy business liability:    All of the answers are correct

Question 1 1 / 1 pts In which type of business entity can ONLY business assets can be used to satisfy a tort or contract judgment against the business and its owners; the personal assets of the owners cannot be used to satisfy business liability:    All of the answers are correct

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Question 1

1 / 1 pts

In which type of business entity can ONLY business assets can be used to satisfy a tort or contract judgment against the business and its owners; the personal assets of the owners cannot be used to satisfy business liability:

  

All of the answers are correct.

  

Limited Liability Company (LLC)

  

C-Corporation

  

S-Corporation

 

 

Question 2

0 / 1 pts

In a Limited Liability Company (LLC), who legally owns the business assets such as land, equipment, inventory, livestock, etc.?

  

The business owns assets in a separate legal entity

  

The individual who is the owner of the business

  

A group of people who co-own the business

  

Any investors who put money into the business own an undivided interest in all of the business assets.

 

 

Question 3

1 / 1 pts

The term “limited liability” as it applies to business entities means that:

  

Only the business assets can be used to satisfy a tort or contract judgment against the business and its owners.

  

Business assets and the personal assets of the owners can be used to satisfy a tort or contract judgment against the business and its owners.

  

The business entity cannot be held liable for any tort claim, only the person who was actually at fault.

  

There is no limited liability for any business entity.

 

 

Question 4

1 / 1 pts

Why do most farms NOT incorporate their business as a C-corporation today?

  

Taxation on both the business and on individual owner dividends, plus the administrative burden.

  

Corporations have a bad reputation.

  

Corporations can be bought by outside investors, taking them out of the family's control.

  

Limited liability for shareholders

 

 

Question 5

1 / 1 pts

What is it called when business assets or personal assets of a business owner can be used to satisfy a tort or contract judgment?

 

Limited liability

  

Unlimited liability

  

Liquidated damages

  

Pass-through liability

 

 

Question 6

1 / 1 pts

Which type of taxation is preferred by most people when setting up a business entity?

  

Pass-through taxation

  

Corporate taxation

  

Capital gains taxation

 

Income taxation

 

 

Question 7

1 / 1 pts

Trevor runs his seed business and filed as an LLC with the secretary of state. However, he doesn't keep a bank account in the name of his business, he only keeps a bank account in his own name and pays the business bills and payroll directly from his personal bank account and uses all the business profits as he pleases.

While making a delivery, Trevor pulled out in front of a car on the highway and caused a 3-car accident. To make matters worse, he forgot to pay his insurance premium and the drivers sue him for the damages. Because he was on a business delivery and his business is an LLC, Trevor claims that they drivers can't sue him personally. Can the other drivers make Trevor pay from his personal accounts and why?

  

Yes, they can "pierce the corporate veil" because he was not keeping business funds separate from personal funds.

  

Yes, they can "pierce the corporate veil" because he was driving the truck himself.

  

No, because his business is an LLC, which limits liability to business assets.

  

No, because he could sell property used in his business to pay the damages.

 

 

Question 8

1 / 1 pts

Lester and Leslie decide to start a llama breeding business, LL Llamas, LLC. Each contributes $25,000 to incorporate as an LLC to get the business started and the business takes loan and mortgage for $300,000 to buy lands. Business is running along smoothly, and they agree to allow a local school to come out for a field trip to see the llamas. While the children are touring the farm, one spirited boy rushes up to a llama that is behind a fence. The llama spits at him and hits him in the eye. A school worker rushes him to the emergency room to be examined. The boy’s parents sue LL Llamas for $10,000 in medical bills. 

Meanwhile, Larry is out with the company truck to pick up supplies for the business. While he is out, he goes out of his way to return his overdue library books. While running up the stairs to the library to get to the drop box, he elbows an elderly woman with a cane, who falls down the stairs and breaks her hip. She sues Larry for $40,000.

Who do Larry and Leslie owe, and do they owe from personal accounts or business accounts?

  

The boy gets $10,000 from LL Llamas and the elderly woman gets $40,000 from LL Llamas.

  

The boy gets $10,000 from LL Llamas and the elderly woman gets $40,000 from Larry.

  

The boy gets $10,000 from Larry and/or Leslie personally and the elderly woman gets $40,000 from LL Llamas.

 

Any of the plaintiffs can sue Larry or Leslie personally or through LL Llamas, depending on who has more money.