Professional Documents
Culture Documents
Cost Accounting Solman de Leon 2015
Cost Accounting Solman de Leon 2015
Cost Accounting Solman de Leon 2015
1. Characteristics of a partnership:
a. Consensual
b. Onerous - contribution of money, property, or industry into a
common fund
c. Nominate - Designated Name
d. Preparatory - Its organization is followed by other contracts to
carry out its purpose
e. Principal - It can stand alone
f. Bilateral or multilateral - 2 or more persons
g. Agency - each partner is an agent to partnership and to each other
4. Even if a partner transfers all interests to another, the transferee does not
become a partner unless all other partners consent. This is based on the
principle of delectus personarum (principle of mutual trust and
confidence).
9. Acts of a partner who is insolvent, does not have a right to wind up the
affairs of the partnership and the business is unlawful doesn’t bound the
partnership.
10. If the partner who acts after dissolution and at fault, he alone ultimately
liable to the creditors. The partners can seek reimbursement from the
partner who is guilty.
11. New creditor is deemed to have knowledge of the dissolution. He is not
therefore, protected by law. Partnership is not bound
12. A partnership begins from the moment of execution of the contract but
there can be stipulation otherwise.
17. Death of the president or chairman does not dissolve the firm
24. Partnership de facto - a partnership in fact but not in law. It is still valid
partnership although it lacks certain requirements for its legality
25. A husband and wife cannot enter into a contract of universal partnership
because this has the effect of donation and there are prohibited from giving
donation to each other. They can enter into a particular partnership but not
to govern their property relations.
27. A person may be a general partner and a limited partner in the same
partnership at the same time, provided this fact is stated in the certificate of
a limited partnership
29. A capitalist partner will be obliged to sell his interest to the other
partners when in case of imminent loss of the business of the partnership he
refuses to give additional contribution.
30. Capitalist partner cannot engage in the same or similar business of the
firm unless permitted by all others
33. An agreement that even the industrial partner shall be liable for losses is
permissible.
34. If a partner gives a receipt for the firm, it is the firm's credit that has
been collected. If it his own receipt, payment of the debtor will be pro-rated
between the firm and the partner receiving the payment.
35. A partner has the right to be reimbursed by the partnership for the
amount disbursed on behalf of the partnership and the right to ask for
dissolution of the firm at the proper time.
36. A partner has the right in a specified partnership property to use it for
business purposes only.
37. The right to inspect and copy books is not available to the partnership
pending dissolution nor in one already dissolved
39. Joint management arises when two or more partners are appointed
managers with an agreement that one cannot act without the consent of the
others. The approval of all the managers is necessary for the validity of one's
act.
42. General or limited partner partners may exercise some rights not
available in the general partnership, if the same are given and indicated in
the certificate such as the remaining general partners may continue the
business even upon death, retirement, civil interdiction of a general partner
or the limited partner to demand and receive property other than cash in
return for his contribution
43. If the firm upon dissolution is not solvent, a limited partner does not
enjoy the same preference as an outside creditor.
44. A limited partner who is held liable as a general partner does not
however get the rights of the latter
6. The purposes, where there is more than one, must be capable of being
lawfully combined. Thus, banks which are governed by the general banking
law of 2000 are prohibited from directly engaging in non-banking activities
such as insurance. Similarly, Insurance companies are not allowed to engage
in banking operations.
9. The place of principal office does not necessarily mean the place where
the business of the corporation is transacted but the place where its books
and records are ordinarily kept and its officers usually meet for the purpose
of managing the affairs and transacting the business of the corporation.
10. If the new address is located within the same city or municipality, no
corporate document is required to be filed with the SEC except a notice
regarding the change of address.
11. The incorporating directors or trustees shall hold office until their
successors are duly elected and qualified. They are intended to hold office
for one year when the corporation is organized
12. Every director must have at least one share of capital stock of the
corporation of which he is director.
13. If some or all of the shares are without par value, such fact shall be
stated in the articles
14. If the shares have par value, the amount of the authorized capital
stock in pesos is specified in the articles, but if they have no par value, no
amount of capital stock is specified in the articles which need only state the
number of shares into which said capital stock is divided. The reason is that
the price of no-par value shares may vary from time to time and therefore
the total amount of the capital stock cannot be known until all the shares are
issued.
15. Corporations which will engage in any business or activity reserved for
Filipino citizens shall provide in their articles of incorporation the restriction
against the transfer of stock or interest which will reduce the ownership of
Filipino citizens to less than the required percentage of the capital stock as
provided by existing laws.
16. The general amendment may also be effected by the “written assent”
of the stockholders representing 2/3 of the outstanding capital stock or 2/3 of
its members, meaning that such action need not be taken at a meeting and
upon a vote.
18. The amendments shall take effect only upon their approval of the SEC
22. In the case of religious corporations, the code does not require the SEC
to issue a certificate of incorporation. From and after the filing of articles, the
chief archbishop shall become a corporation sole.
23. De facto is the one that has not complied with all the requirements
necessary to be a de jure corporation but has complied sufficiently to be
accorded corporate status as against third parties although not against the
state
29. BOD holds a fiduciary relation (trust and confidence) to the corporation
and the stockholders or members they represent. They are required to
discharge their duties in good faith and with diligence, care and skill. They
are liable if they breach their fiduciary duty.
30. For BOD to exercise their powers, they must meet as directors or
trustees and act at a meeting at which there is a quorum
31. Directors are not agents of the corporation and thus have no power
acting individually to bind the corporation
35. Under the doctrine of piercing the veil of corporate entity, the
corporation and the persons composing it will be treated as one and identical
person (instances such as fraud, tax evasion, and avoiding obligation).
49. The quorum of board meetings shall be majority of all members of the
BOD or board of trustee.
53. Any 2 or more positions may be held concurrently by the same person
except a president and secretary or treasurer at the same time
54. Straight voting - a stockholder may vote his number of shares for as
many persons as there are directors to be elected.
58. Only the stockholders can remove a director. 2/3 of the outstanding
capital stock or members is required
61. Special meetings may be held at any time upon the call of the
president
63. Directors or trustees are not allowed to vote or attend by proxy and
they do not receive compensation in the absence of any provision in the by-
laws fixing their salary
70. Private corporations engaged in retail trade and rural banking must be
100 percent Filipino-owned. For Public Utility development and exploitation of
natural resource must be at least 60% Filipino owned. For pawnshop, at least
70%
71. Ultra vires act may be ratified by approval. If fully or partially executed
can bind the parties. An illegal act can never be binding to the corporation.
72. Stated value of no-par value shares shall not be less than 5
77. Shares of stock are deemed issued from the moment subscription is
accepted whether fully paid or not(incorporation)
80. A subscriber is entitled to all the rights of a fully paid stockholder for as
long as he has not been declared delinquent
85. A director elected to fill a vacancy shall serve only for the unexpired
portion of the term of his predecessor in office
91. A director can quit any time but by reason of fiduciary nature of the
position they occupy, he cannot resign as part of a fraudulent scheme to
prejudice the corporation. He should repair and make good such loss in case
of loss of profits.
97. The per diems granted to the directors should not be included in their
total yearly compensation for purposes of the 10 percent limitation
102. The executive committee must be provided for in the by-laws and
composed of not less than 3 members of the board. The committee may act
on specific matters within the competence of the board, as may be
delegated to it by the board or in the by-laws except those to which only the
board duly called and assembled as such can act upon.
104. Committee cannot delegate its authority even to one of its members
since it can only bind the corporation through majority of votes
108. A corporation may not engage in a business different from that for
which it was created as a regular and a permanent part of its business. This
is especially true in banking and insurance companies organized under
special laws.
110. Power to acquire and convey property has always been regarded as an
incident to every corporation
111. A stockholder has absolute right to use, enjoy and dispose of his
properties, to perform all acts and to make all contracts without any
restriction except when they are prohibited by law.
114.A corporation which has been dissolved after the expiration of the 3-year
winding up period ceases to be de jure de facto and therefore it cannot sue
or be sued
117. Purchasing or holding real and personal property, to adopt and use a
corporate seal, to contract and make by-laws are incidental powers
118. A corporation may not hold alienable lands of a public domain except by
lease for a period not exceeding 25 years, renewable for not more than 25
years and not to exceed 1,000 hectares in area.
122. Excess stock issued is void even in the hands of a bona-fide purchaser
for value
127. Any disposition which does not involve all or substantially all of the
corporate assets made in the ordinary course of business does not require
the approval of the stockholders and would not entitle any dissenting
stockholders to exercise his appraisal right. It can only exercise the same if it
is on the sale of all or substantially all of the corporate assets as such which
would render the corporation incapable of continuing the business or
accomplishing the purpose for which it was incorporated.
128. The acquisition of shares shall be for legitimate purposes, its capital is
not impaired, in good faith without prejudice to the rights of the stockholders
and creditors and that there is an unrestricted retained earnings to cover the
shares acquired.
132. A corporation may invest its funds in another business which is incident
or auxiliary to its primary purpose as stated in the articles of incorporation
without the approval of the stockholders. In such case, dissenting
stockholders shall have no appraisal right.
133. Stock dividend shall not be issued without the approval of 2/3. The
board may declare dividends other than stock without need of stockholder’s
approval.
134. A corporation cannot make a valid contract to pay dividends other than
from retained earnings or profits and an agreement to pay such dividends
out of capital is unlawful and void.
135. Stockholders should only receive dividends from their investment and
not from their investment itself.
138. The directors are the judges on how and when to spend corporate
funds.
142. Some courts take the view that unlawful dividends received in good
faith by the stockholders may not be recovered if the corporation is solvent.
143. In the absence of a record date, the dividend belongs to the person who
is the owner of the shares of stock at the time of declaration.
144. Declaration of stock dividends may be rescinded at any time before the
actual issuance.
147. The contract must be approved by a majority of the quorum of BOD and
prescribed vote of the stockholders of both the managing and the managed
corporation. The period of the contract must not be longer than 5 years for
any one term.
148. Upon the issuance of the certificate of incorporation, the corporation
comes into existence but not yet otganized.
149. By-laws shall be adopted within one month after receipt of official notice
of the issuance of its certificate of incorporation by the SEC. Nevertheless,
by-laws may be adopted and filed prior to incorporation with the articles of
incorporation. Failure to file a code of by-laws within one month from the
date of incorporation with the SEC shall render the corporation liable to the
revocation of its registration
150. By-laws must be general and uniform in their operation and not directed
against particular individuals, and must not be discriminatory.
151. By-laws are not binding to a party who doesn’t have knowledge of its
provision.
153. Corporation cannot provide in the by-laws for the manner of election
and the term of office of directors or trustees which are already regulated by
law.
154. The power to make and repeal by-laws can only be exercised at a
regular or special meeting duly called for the purpose. It can be delegated
(2/3) to directors. But the power to amend the articles of incorporation lies
with the stockholders members and cannot be delegated to directors.
155. To revoke the delegated power, the law merely requires the vote of
majority of the outstanding capital stock.
158. The president shall preside at all meetings of directors or trustees and
of the stockholders or members, even where the chairman of the board is
present, unless otherwise provided in the by-laws.
159. The directors or trustees are not a corporate body; they are, when
acting as a board, agents of the corporation.
160. In the absence of provision in the by-laws, the meeting may be called
by a director or trustee or by an officer entrusted with the management of
the corporation.
170. A stockholder may make the call on order of the SEC whenever for any
cause, there is no person authorized to call a meeting.
171. The special meeting for the removal of directors may be called by the
secretary of the corporation or by a stockholder.
172. Whether regular or special, notice must be given when required by the
law or by the by-laws of the corporation.
175. Unless otherwise provided in the by-laws or in the code, a quorum shall
consist of the stockholders representing a majority of the outstanding capital
stock or a majority of the members in the case of nonstock corporation. A
majority vote, in the absence of express provision in the by-laws and unless
the vote of a greater number is required by law, is sufficient to decide any
question properly presented.
176. To amend the articles—majority vote of BOD and vote or written assent
of 2/3
185. To issue stock dividends—majority of the quorum of BOD and 2/3. The
approval of stockholders is not required with respect to other dividends such
as cash and bond dividends.
188. To fix the issued price of no par value shares—a majority of the quorum
of BOD if authorized by the articles of incorporation or in the absence of such
authority, by a majority of the outstanding capital stock.
190. To dissolve the corporation—a majority vote of BOD and 2/3 of the
outstanding capital stock or of the members
194. If the presiding officer is not present at the time for a meeting to
convene, a stockholder who takes the floor may temporarily preside at the
meeting of stockholders pending the selection of the presiding officer. Unless
the contrary is provided by the by-laws, the presiding officer may be selected
by the vote of the stockholders present.
195. One cannot vote if he does not appear to be a stockholder in the books
of the corporation
199. The right to vote by proxy is a special form of agency. No proxy shall be
valid and effective for a period longer than 5 years.
201. Proxies are irrevocable at any time unless made irrevocable by the
giver. It becomes irrevocable when the holder of proxy has given or promised
a stockholder a consideration or interest (loan of money in return for
irrevocable proxy.
203. Trustee is the legal title holder or owner of the shares so transferred
under the agreement. Hence, he is qualified to be a director.
204. The ultimate control of the corporation depends upon the votes of the
stockholders
206*. The stockholders have the power to fill vacancy in the BOD if the cause
is any of the ff: (1)removal (2) Expiration of term (3) Increase in the number
of directors
207*. BOD can fill the vacancy if the cause of vacancy is other than removal,
expiration of term or increase in the number of director and the remaining
directors still constitute a quorum
209. A contract of the corporation with one or more its directors or trustees is
voidable unless all the ff conditions are present: (1) that the presence of such
director is not necessary to constitute a quorum (2) that the vote of such
director was not necessary for the approval of the contract (3) that the
contract is fair and reasonable under the circumstances.. When any of the
first two conditions is absent, such contract may be ratified by the vote of
2/3. Full disclosure of the adverse interest of the director involved must be
made at such meeting.
213. A donation must be for a public welfare and not for political purpose
214. Specific express powers are to shorten or extend corporate life, increase
or decrease capital stock, power to incur create or increase bonded
indebtedness and power to deny preemptive right.
215. All stockholders must give their consent for the ratification of an ultra
vires act.
222. The BOD may fix the issued price of no-par value shares if authorized by
the articles of incorporation. In absence of it, by the stockholders.
223. The issued price of no par shares may vary from time to time as it is
usually fixed on the basis of their book values.
225. Unregistered transfer shall not be valid except as between the parties. It
is the conveyance not the act of registration which gives title to the
transferee.
228. To affect 3rd persons, date and description of shares pledged appear in
a public instrument is enough.
229. The shares which may be alienated are those covered by certificates of
stock.
230. Shares of stock which is not fully paid shall not be transferable on the
books of the corporation.
231. Unless prohibited by by-laws, certificate of stocks may be issued for less
than the number of shares subscribed for, provided the par value of each
share is fully paid for.
234. In a derivative suit, the wrong is inflicted directly on the corporation and
indirectly upon the stockholders.
237. The liability of the consenting director/officer for the "water" in the
stock is solidary with the stockholder concerned.
242. You must act in good faith to be allowed to inspect the books.
236. Generally, where one corporation sells or otherwise transfers all its
assets to another corporation, the latter is not liable for the debts of the
transferror unless the transferee assumed the liabilities of the former. Sale of
the assets to another corporation for stock, if followed by dissolution, has the
effect of a merger.
238. Any stockholder of a close corporation may, for any reason, compel said
corporation and purchase his share at fair value which shall not be less than
their par value or issued value, when the corporation has sufficient assets in
its books to cover its debts and liabilities exclusive of capital stock.
240. Failure of the stockholder to make demand within 30-day period shall be
deemed a waive of his appraisal right.
241. Payment of appraisal right shall be made only if the corporation has
unrestricted retained earnings.
242. Once the dissenting stockholder demands payment of the fair value if
his shares, all right shall be suspended. If he is not paid within 30 days, his
voting and dividends rights shall be restored.
247. If first elected, 1/3 of the BOT members shall expire every year and
subsequent trustees shall have 3 years. Trustees elected to fill vacancies
occurring before the expiration of a particular term shall hold office only for
the unexpired period
248. Non-stock may invest its accumulated funds for profit purposes but
such power must be included in its articles in order that investment may not
be considered ultra vires.
249. The right to vote of members may be limited, broadened or were denied
in the articles of incorporation or the by-laws.
250. Each member shall be entitled only to 1 vote in the election of trustees
unless cumulative voting is authorized.
253. Non-stock may designate their governing boards by any name other
than BOT. Trustees have duties similar to those of stock corporation.