ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD

CORPORATION PART 1 QUIZ

NAME: ____________________________________________ SCORE:____________________

SECTION: _________________________________________ DATE: ____________________

GENERAL INSTRUCTIONS:
A. TEST PAPER, PENS/PENCIL, CALCULATOR AND DRINKING WATER ARE ONLY ALLOWED
TO BE USED DURING THE TEST. ALL OTHER THINGS MUST BE PLACED IN FRONT OF
THE ROOM.
B. WRITE YOU ANSWER ON THE SPACE PROVIDED.
C. STRICTLY NO ERASURES, SUPERIMPOSITIONS, CUTTING OF PAPER, OR ANY OTHER
MEANS IN ALTERING YOUR ANSWER.
D. USE BLACK OR BLUE INK IN WRITING YOUR FINAL ANSWER. ERASABLE INKS ARE
PROHIBITED. YOU MAY USE PENCIL FOR YOUR SOLUTIONS.
E. NON-COMPLIANCE FOR INSTRUCTIONS A-D WILL GIVE THE STUDENT CORRESPONDING
DEDUCTIONS.
F. POINTING SYSTEM PER ITEM: MULTIPLE CHOICE- 1 POINT; MATCHING TYPE – 1
POINT; JOURNAL ENTRIES - 2 POINTS PER REQUIREMENT.
G. TIME ALLOTMENT: 1HOUR AND 15 MINUTES

PART I. MULTIPLE CHOICE

________1. Which of the following is/are true?

I. The president of a corporation must be a director of the corporation.
II. lncorporators can be artificial beings.

a. I only
b. II only
c. Both
d. None

________2. Which of the following is/are true?

I. Death of a shareholder will not dissolve the corporation.
II. Preference shares of stock should only be issued as par value shares.
a. I only
b. II only
c. Both
d. None

________3. Which of the following is/are true?

I. A de jure corporation is a corporation existing in fact and in law.
II. Shares without par value may be issued for a consideration less than P5.00
per share.
a. I only
b. II only
c. Both
d. None

________4. Which of the following is/are true?

I. The liability of the shareholders for the payment of corporate debts is

limited to the value of their shares.
II. Shareholders may be natural or juridical persons.
a. I only
b. II only

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 1
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

c. Both
d. None
________5. Which of the following is/are true?
I. No-par value shares have a minimum stated value of P500 per share.
II. 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.
a. I only
b. II only
c. Both
d. None
________6. Which of the following is/are true?

I. Preference shares of stock may be Issued with par or no-par value.

II. A corporation can be a general partner in a partnership.
a. I only
b. II only
c. Both
d. None
________7. Which of the following is/are true?

I. The board of directors shall exercise the corporate powers of a corporation.

II. A corporation can be held liable for personal indebtedness of a
shareholder.
a. I only
b. II only
c. Both
d. None

________8. Which of the following is/are true?

I. Shareholders of a corporation elect the board of directors, who in turn
appoint the top officers of the corporation.
II. 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 five thousand
pesos.
a. I only
b. II only
c. Both
d. None

________9. Which of the following is/are false?

I. A corporation has continuity of existence which permits the business to
continue regardless of changes in ownership or the death of a shareholder.
II. A corporation or a partnership can be an incorporator but not a corporator.
a. I only
b. II only
c. Both
d. None

________10. Which of the following is/are false?

I. All incorporators (if they continue to be shareholders) are corporators of a
corporation.

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 2
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

II. All corporations issue shares of stock and are either public or private.
a. I only
b. II only
c. Both
d. None

________11. Which of the following is/are false?

I. A partnership can be a corporator in a corporation.
II. No-par value shares may not be issued without being fully paid.
a. I only
b. II only
c. Both
d. None

________12. Which of the following is/are true?

I. A shareholder in a corporation does not have the right to transact corporate
business or to intervene in the management of the business.
II. Stock corporations have their share capital divided into shares and are
authorized to distribute to the holders of such shares dividends or allotments
of the accumulated profits on the basis of the shares held.
a. I only
b. II only
c. Both
d. None

________13. Which of the following is/are true?

I. The board of directors is responsible for the formulation and implementation
of the overall policies for the corporation.
II. Any individual shareholder in a corporation may personally be held liable
for all debts incurred by the corporation.
a. I only
b. II only
c. Both
d. None

________14. Which of the following is/are false?

I. Non-stock corporations may be formed or organized for charitable, religious,

educational, professional, cultural, recreational, fraternal, literary,
scientific, social, civic service, or similar purposes.
II. A public corporation is one formed for the government of a portion of the
state.
a. I only
b. II only
c. Both
d. None

________15. Which of the following is/are false?

I. All incorporators are subscribers but a subscriber need not be an
incorporator.
II. A corporation can come into existence by mere agreement of the parties as
in the case of partnerships.

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 3
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

a. I only
b. II only
c. Both
d. None

________16. Which of the following is/are false?

I. A corporation is created by agreement of the shareholders.
II. Eleemosynary corporations are those organized for public charity.
a. I only
b. II only
c. Both
d. None

________17. Which of the following is/are true?

I. A corporation is an artificial being with a personality separate and apart

from its individual shareholders or members.
II. Shares of stock cannot be transferred without the consent of the other
shareholders.

a. I only
b. II only
c. Both
d. None

________18. Shares of DHS Stock cannot be purchased in any stock exchange or by

just any individual. This means that DHS is a(n)
a. partnership
b. open corporation
c. family corporation
d. close corporation

________19. Corporate officers are

a. elected by shareholders
b. appointed by the board of directors
c. appointed by management
d. elected by incorporators.

________20. Which of the following is a disadvantage of the corporate form of

ownership?
a. difficulty of formation
b. limited liability
c. expense of incorporation and selling stock
d. lack of secrecy

________21. Which of the following is necessary in order that one may be

elected president of the corporation?
a. he must be a citizen and resident of the Philippines
b. he must be a director of the corporation
c. He must not be a shareholder or director of a competitor corporation

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 4
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

d. He must not be a president of any other corporation

e. All of the above

________22. The par value of ordinary shares is equal to

a. The amount received by the corporation when the share was originally
issued.
b. The amount at which the share is currently trading in an organized
market.
c. A designated peso amount per share established in the articles of
incorporation.
d. The book value of the ordinary shares.

________23. Persons who compose the corporation whether as shareholders or

members are called
a. corporators
b. incorporators
c. promoters
d. subscribers
e. none of the above

________24. No par value shares can be issued

a. for equal to or less than P5.
b. with preference as to assets or as to dividends.
c. if fully paid.
d. by banks, trust companies, insurance companies, public utilities, and
building and loan associations.

________25. On the balance sheet, a corporation must disclose all the following
except the number of shares
a. authorized
b. unissued
c. issued
d. outstanding

PART II. MATCHING TYPE. Write the letter before each number.

Column I
A Authorized Share
Capital
B Preference Shares
C Corporation
Column II
_____ 1. It is an artificial being created by
operation of law, having the rights of
succession and the powers, attributes
and properties expressly authorized by
law or incident to its existence.
_____ 2. A class of share capital which has a
class of priority over ordinary
shareholders in terms of dividends and
liquidation of assets.
_____ 3. It is issued by the corporation which
permits the shareholder at his option
and within a specified period, to

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 5
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

exchange shares currently held shares

D Unissued Shares
E Outstanding Shares
F Share Premium
G Contributed Capital
H Shareholders’ Equity
I Convertible
Preferred Shared
J Legal Capital
K Ordinary Shares
for ordinary share at a specified rate.
_____ 4. For par value shares, it is that amount
equal to the aggregate of all issued and
subscribed par value shares times its
par value.
_____ 5. The maximum number of shares that a
corporation may issue as stated in the
articles of incorporation multiplied by
par value.
_____ 6. The residual amount after the claims of
the creditors are subtracted from total
assets of the corporation.
_____ 7. The total shares of stock at the hands
of stockholders plus total shares
subscribed, whether fully or partially
paid, as long as there is a binding
subscription agreement.
_____ 8. The account title used for the amount
paid in excess of par or stated value.
9. The amount of cash and property received
_____ by the corporation from shareholders for
the shares of stocks sold.
_____ 10. The number of shares of stock that
remain unsold after deducting the issued
share capital from the authorized share
capital.

PART III. JOURNAL ENTRIES.

CASE 1. Here are the transactions of Alphabet Corporation for the year 2016.
Provide the necessary entries.

January 2 Alphabet Corporation was authorized by the Securities & Exchange

Commission to issued capital stock consisting of 10% Preference
Shares, 5,000 shares, cumulative and fully participating @ P100 par
value and Ordinary shares, 10,000 shares @ P100 par value.
Jan 2 a. Memorandum entry: Authorized to issue
5,000 shares of 10% Preference Shares,
cumulative and participating @ P100 par
value and 10,000 shares of Ordinary shares
at P100 par value

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 6
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

January 3 Mr. A, B, C, D, and E bought, 100 shares each at par value of

preferred shares.

Jan 3 Cash 500

Preference Shares 500

January 4 Mr. S purchased 1,800 shares or ordinary shares with the following
assets accepted by the corporation:
Fair market value At Cost
Merchandise inventory 60,000 65,000
Machinery & equipment 140,000 280,000
Total 200,000 345,000
Stock certificate was issued immediately.

Jan 4 Merchandise inventory 60,000

Machinery & Equipment 140,000
Ordinary Shares 180,000
Share Premium-Ordinary 20,000

January 5 Received a statement of account from Atty. W for his legal

services, amounting to P15,000. Instead of paying cash, 100 shares
of ordinary shares were issued to the lawyer. Currently, the stocks
sells for P140.
Jan 5 Legal Fees 15,000
Ordinary Shares 10,000
Share Premium – Ordinary 5,000

January 6 Mr. Beca bought 100 ordinary shares for P150 each.

Jan 6 Cash 15,000

Ordinary Shares 10,000
Share Premium – Ordinary 5,000

CASE 2. DHS Corporation is authorized to issue 100,000 ordinary shares. During

the current year, the corporation issued 15,000 shares.

Provide the required entry to record the issuance of the ordinary shares under
each of the following assumptions

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 7
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

a. The shares have a P8 par value and were sold for P20 per share.

Cash 300,000
Ordinary Shares 120,000
Share Premium – Ordinary 180,000

b. The shares are no-par but have a stated value of P10. Th total issue price
was P600,000.

Cash 600,000
Ordinary Shares 600,000

OR
Cash 600,000
Ordinary Shares 150,000
Share Premium – Ordinary 450,000

c. Using the scenario in letter a, how much would be the total shareholders
equity assuming the company earned a profit of P1,950,000 and declared
dividends of P550,000 which will be distributed next year?

Share Capital

Ordinary Shares 120,000

Share Premium 180,000

Retained Earnings (1,950,000-550,000 1,400,000

SHAREHOLDER’S EQUITY 1,700,000

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 8
ACC 102: FUNDAMENTALS OF FAR 3RD GRADING PERIOD
CORPORATION PART 1 QUIZ

-NOTHING FOLLOWS-

KEY ANSWERS
MATCHING TYPE
1. C
2. B
3. I
4. J
5. A
6. H
7. E
8. F
9. G
10. D

He guards the paths of the just and protects those who are faithful to Him. –Proverbs 2:8 | 9