TRUE OR FALSE
All incorporators (if they continue to be shareholders)
1. Preference shares of stock may be issued with par or
no-par value.
2. A corporation can be a general partner in a
partnership.
3. The board of directors shall exercise the corporate
powers of a corporation.
4. A public corporation is one formed for the government
of a portion of the state.
5. All incorporators are subscribers but a subscriber
need not be an incorporator.
6. A partnership can be a corporator in a corporation.
7. No-par value shares may not be issued without being
fully paid.
8. A shareholder in a corporation does not have the right
to transact corporate business or to intervene in the
management of the business.
9. A corporation can come into existence by mere
agreement of the parties as in the case of partnerships.
10. A corporation can be held liable for personal
indebtedness of a shareholder.
11. Shareholders may be natural or juridical persons.
12. No-par value shares have a minimum stated value of
P5.00 per share.
13. Each of the incorporators of a stock corporation must
own or be a subscriber to at least two (2) shares of the
share capital of the corporation.
14. The board of directors is responsible for the
formulation and implementation of the overall policies for
the corporation.
15. Eleemosynary corporations are those organized for
public charity.
16. A corporation is an artificial being with a personality
separate and apart from its individual shareholders or
members.
17. Shares of stock cannot be transferred without the
consent of the other shareholders.
18. Shareholders of a corporation elect the board of
directors, who in turn appoint the top officers of the
corporation.
19. Under the RCCP, at least twenty five percent of
authorized share capital must be subscribed and at least
twenty-five percent of the total subscription must be paid
upon subscription. In no case shall the paid-up capital be
less than P5,000.
20. A corporation has continuity of existence which
permits the business to continue regardless of changes
in ownership or the death of a shareholder.
21. Only natural persons can be incorporators.
22. Any individual shareholder in a corporation may
personally be held liable for all debts incurred by the
corporation.
23. Non-stock corporations may be formed or organized
for charitable, religious, educational, professional,
cultural, recreational, fraternal, literary, scientific, social,
civic service, or similar purposes.
24. A corporation is created by agreement of the
shareholders.
This study source was downloaded by 100000824559107 from CourseHero.com on 05-21-2022
https://www.coursehero.com/file/117448150/CHAPTER-5-ASSESSMENTdocx/
25.
are corporators of a corporation.
26. All corporations issue shares of stock and are either
public or private.
27. Stock corporations have their share capital divided
into shares and are authorized to distribute to the
holders of such share dividends or allotments of the
accumulated profits on the basis of the shares held.
28. The president of a corporation must be a director of
the corporation.
29. Incorporators can be artificial beings.
30. Death of a shareholder will not dissolve the
corporation.
31. Preference shares of stock should only be issued as
par value shares.
32. A de jure corporation is a corporation existing in fact
and in law.
33. Shares without par value may be issued for a
consideration less than P5.00 per share.
34. The liability of the shareholders for the payment of
corporate debts is limited to the value of their shares.
35. A corporation shall have a corporate term of 50 years
unless its articles of incorporation state it as of perpetual
existence.
36. Any person, partnership, association or corporation,
singly or jointly with others but not more than fifteen (15)
in number, may organize a corporation for any lawful
purpose or purposes.
37. Natural persons who are licensed to practice a
profession, and partnerships or associations organized
for the purpose of practicing a profession, are allowed to
organize as a corporation.
38. Under the old Corporation Code, the minimum
number of incorporators was five. Under the RCCP, one
person can form a corporation, the one-person
corporation.
39. Corporations vested with public interest shall have
independent directors constituting at least 25% of such
board.
40. Foreign corporations are allowed to give donations in
aid of any political party or candidate or for purposes of
partisan political activity.
41. In the articles of incorporation, the principal place of
business must be a specific address within the
Philippines.
42. A majority of the incorporators must be residents of
the Philippines. TRUE OR FALSE
43. The incorporators and the treasurer sign the articles
of incorporation.
44. If a corporation does not formally organize and
commence its business within 3 years from the date of
its incorporation, its certificate of incorporation shall be
deemed revoked as of the day following the end of the 3-
year period.
45. If the corporation is vested with public interest, the
board has the option to elect a compliance officer.
46. OPC is a corporation with a single stockholder, who
may be a natural or artificial person, a trust or an estate.
47. The OPC has a personality separate and distinct
from20:04:20
the GMT
single stockholder as such the sole
-05:00
shareholder's liability is always limited to his investment.
 48. The treasurer who may or may not be a director is 7. How can the following statement be best explained:
not required to be a resident of the Philippines. "Shareholders control the activities of a corporation"?

49. The single stockholder shall be the sole director and

president of the OPC. a. All shareholders vote on all the major issues and
problems that a corporation faces on a monthly basis.
50. The single stockholder may be appointed as the b. Shareholders are intricately involved in the daily
corporate secretary of the OPC. operations of a corporation.
c. Shareholders elect the board of directors, and this
board is responsible for appointing corporate officers
who manage the daily business of the corporation.
d. Shareholder’s vote for the members of the board of
MULTIPLE CHOICE
directors and this board makes all the daily business
1. An ordinary or preference shareholder is similar to a decisions for the corporation.
lose no more than the value of the investment. e. Shareholders usually call corporation management
and tell executives better ways to run the organization.

a. general partner 8. The top governing body of a corporation is known as

b. limited partner the
c. sole proprietor
d. nominal partner a. incorporators.
e. stockbroker b. shareholders.
c. management.
d. officers.
2. What is the primary disadvantage of both a sole e. board of directors.
proprietorship and a partnership that a corporation
overcomes?
9. Corporate officers are

a. elected by shareholders.
a. No access to capital b. appointed by the board of directors.
b. Taxing complications c. appointed by management.
c. Unlimited liability d. elected by incorporators.
d. Ease of start-up
e. Lack of secrecy
10. Which of the following is not a disadvantage of the
corporate form of ownership?
3. A corporation whose stock can be purchased by
anyone and is traded in stock markets is known as a(n) a. Difficulty of formation
b. Limited liability
c. Expense of incorporation and selling stock
d. Lack of secrecy
a. government-owned corporation.
b. close corporation.
c. open corporation. 11. The order of difficulty and expense, from most to
d. not-for-profit corporation. least, when forming a business organization is as
follows:
4. Shares of 1st Global StratDev stock cannot be a. corporation, sole proprietorship, partnership.
purchased in any stock exchange or by just any b. corporation, partnership, sole proprietorship.
individual. This means that 1st Global StratDev is a(n) c. partnership, corporation, sole proprietorship.
d. partnership, sole proprietorship, partnership.
e. sole proprietorship, partnership, corporation.
a. partnership.
b. open corporation.
c. family corporation.
d. close corporation.

5. When organizing a corporation, the incorporators

submit articles of incorporation to

a. a judge.
b. the Securities and Exchange Commission.
c. the National Bureau of Investigation.
d. the Board of Investments.

6. Ordinary shares carry all the following rights except

the right to

a. share in profits.
b. receives information about the corporation.
c. receives part of the profit before other classes of
shares.
d. attends the annual shareholders' meeting.
This study source was downloaded by 100000824559107 from CourseHero.com on 05-21-2022 20:04:20 GMT -05:00

https://www.coursehero.com/file/117448150/CHAPTER-5-ASSESSMENTdocx/
 MULTIPLE CHOICE d. has the powers, attributes and properties expressly
authorized by law or incident to its existence.
e. none of the above
1. Which of the following qualifications is necessary in
order that one may be elected president of the 9. The owners of shares in a stock corporation are called
corporation?
a. incorporators.
a. He must be a citizen and a resident of the Philippines. b. promoters.
b. He must be a director of the corporation. c. members.
c. He must not be a shareholder or director of a d. shareholders.
competitor corporation.
d. He must not be a president of any other corporation.
e. All of the above. 10. Refers to an equitable right of shareholders to
subscribe to newly issued shares of the corporation in
proportion to their present shares in order to maintain
2. It is the supreme authority in matters of management their equity in their surplus as well as proportionate
of the regular and business affairs of a corporation. standing in the corporation.
a. board of directors
b. majority shareholders
c. minority shareholders a. right of redemption
d. none of the above b. pre-emptive right
c. right to be sued
d. concept of corporate entity
3. The following are the steps in the creation and
organization of a corporation except
11. The advantage of a corporation from a partnership is
a. incorporation.
b. promotion.
c. formal organization and commencement of business
operations. a. The death of a shareholder will not dissolve the
d. none of the above. corporation because of its power of succession.
b. Its management is centralized on the board of
directors. c. Shareholders have limited liability.
4. The par value of ordinary shares is equal to d. Shareholders are not general agents of the business.
e. all of the above
a. the amount received by the corporation when the
share was originally issued.
b. the amount at which the share is currently trading in 12. The most powerful person in a corporation is the
an organized market.
c. a designated peso amount per share established in
the articles of incorporation. a. incorporator.
d. the book value of the ordinary shares. b. president.
c. vice-president.
5. The arbitrary value assigned to a share of stock is d. chairman of the board.
called

a. market value. 13. The shareholders or members mentioned in the

b. par value. Articles of Incorporation originally forming and
c. liquidation value. composing the corporation and who are signatories
d. book value. thereof are called

6. Right of the corporation to continue as a juridical entity a. incorporators.

for the period stated in the Articles of Incorporation b. corporators.
despite the death of any shareholder: c. promoters.
a. right of succession d. subscribers.
b. right of pre-emption
c. right of existence 14. One of the following is not a characteristic of the
d. none of the above corporate form of organization.

7. The directors of a corporation are responsible for

a. limited liability of shareholders
a. declaring dividends. b. mutual agency
b. maintaining shareholder records. c. continuous existence
c. the day to day managing of the business. d. centralized authority
d. preparation of accounting records and financial
statements.

8. A corporation has the following attributes except

a. an artificial being with a personality separate and

apart from its
b. created by operation of law shareholders
c. enjoys
This thewas
study source right of succession
downloaded by 100000824559107 from CourseHero.com on 05-21-2022 20:04:20 GMT -05:00

https://www.coursehero.com/file/117448150/CHAPTER-5-ASSESSMENTdocx/
 15. The ordinary stock of the corporation entitling the
owner to pro-rata dividends without any priority over any
other shareholders but equally with all other
shareholders except preference shareholders is

a. preference share.
b. guaranteed share.
c. convertible share.
d. ordinary share.

16. One who has agreed to take shares from the

corporation on the original issue of such share is called

a. incorporator.
b. member.
c. promoter.
d. subscriber.
e. none of the above

17. No par value shares cannot be issued

a. for less than P5.00.

b. with preference as to assets or as to dividends.
c. without being fully paid.
d. by banks, trust, insurance and preneed companies,
public utilities, building and loan associations and other
corporations obtaining funds from the public.
e. all of the above.

18. Which of the following is a disadvantage of the

corporate form of business?

a. Corporations lack mutual agency.

b. There is a greater degree of government control and
supervision.
c. Ownership shares can be easily transferred.
d. Owners' liability is limited.

This study source was downloaded by 100000824559107 from CourseHero.com on 05-21-2022 20:04:20 GMT -05:00

https://www.coursehero.com/file/117448150/CHAPTER-5-ASSESSMENTdocx/

Powered by TCPDF (www.tcpdf.org)