Ali Is a Member of a Member-Managed LLC

question 86

Multiple Choice

Ali is a member of a member-managed LLC.While Ali is driving to a client's office to handle the LLC's business,he hits an old man and severely injures him.The man sues the LLC and recovers $3 million in damages.The court also determines that Ali was driving above the speed limit while the accident occurred and so was grossly negligent.Which of the following is true of the given scenario?

• A) Ali is liable to the LLC for the $3 million it was ordered to pay the man.
• B) Ali will not be liable to the LLC for any losses caused to the LLC.
• C) The $3 million should be paid by all the members of the LLC.
• D) The $3 million should be paid by the member-managers of the LLC.

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Definitions:

Journal Entries

Records of financial transactions in the accounting system that are entered in the general journal.

Liquidity

Liquidity refers to the ease with which assets can be converted into cash without significantly affecting their market price, crucial for meeting short-term obligations.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate sales or revenue.

Profitability

A measurement of an entity's ability to generate income in relation to its revenue, assets, or equity.