TRUE OR FALSE.

SHADE "A"
FOR TRUE, SHADE "B" FOR
FALSE.
                   

                               
1. All incorporators are shareholders but not all
shareholders are incorporators.                
2. A Corporation, like a partnership may be formed by
mere agreement.                
3. The authorized shares represent the maximum number of
shares that a Corporation may issue.            
4. When share capital is issued for consideration in the form of property other than
cash, the net book value of the property is used to record the transaction.
5. The owners of a stock corporation are called shareholders; the
owners of non-stock corporation are called members.        
6. When the journal entry method is used the account Share capital
is credited upon issuance of stocks.          
7. Under the memorandum entry method, the amount of share capital issued is  
determined by deducting the balance of unissued share capital account from the
balance of authorized share capital account.  
8. A stock certificate is issued to the subscriber upon the full
payment of the subscription.              
9. Additional paid-in capital for the excess of the stock subscription price over
par or stated value is recorded at the time of subscription.    
10. A corporation issued share capital on a subscription basis that is payable in  
three installments. Each time the corporation receives a payment, Share capital
account is credited.  
11. The liability of the shareholders for corporate debts is
limited to the amount of their investment.            
12. A corporation is a business
owned by its shareholders.                    
13. Generally, there are only two classes of authorized share capital, the
preference share capital and the ordinary share capital.      
14. Total issued shares less treasury shares is equal to
outstanding shares.                
15. When subscribed shares are declared delinquent, receivable is
reclassed to the account "receivable from the highest bidder"      

                               
MULTIPLE CHOICE. SHADE THE LETTER
OF THE CORRECT ANSWER                  

                               
16. Which of the following be considered
characteristic/s of a corporation?                
a. Separate legal c. Rights of
entity       succession              
b. Limited liability of d. All of the
shareholders     choices                

                             
17. A Cash asset received in exchange for
share capital is recorded at                  
c. Higher between fair
a. Face value         market value or book value          
b. Fair market
value         d. Book value                

                               
18. The issuance of ordinary share
capital to shareholders
a. increases ordinary share
capital authorized  
b. decreases ordinary share
capital authorized  
                   
c.increases ordinary share
capital outstanding          
d. decreases ordinary
share capital outstanding          

                               
19. Advantages of a
Corporation incudes                        
a. Continuous c. Weak credit
existence       capacity              
b. Subject to rigid d. All of the
government control     above                

                               
20. Process of organizing a
Corporation includes                      
c. Commencement of
a. Promotion         the business            
d. All of the
b. Incorporation         above                

                               
21. Cream Corporation was organized on January 1, 2010 with authorized capital  
of P2,000,000 consisting of 100,000 ordinary shares, P20 par value. Subsequently,
incorporators subscribed for 25,000 shares at P24. How much must be paid up  
upon subscription to comply with the requirement of Securities and Exchange
Commission (SEC)?  

                               
c.
a. P600,000     P500,000                    
d.
b. P125,000     P150,000                    

                               
22. Beige Co. was authorized to issue 10,000 preference shares, P100 par value
and 200,000 no-par ordinary shares. Subscriptions for 4,000 preference shares  
was received at P110 with a downpayment of 25%. What entry should be made in
the books of Beige Co. to record the receipt of subscription?  

                               
a. Preference Share Capital 440,00
Subscription Receivable 0                  
Preference
Share Capital 400,0
  Subscribed     00                
Prefere
nce
Share
Premiu 40,00
  m       0                

                               
b. Preference Share Capital 440,00
Subscription Receivable 0                  
Preference
Share Capital 440,0
  Subscribed     00                

                               
c. Cash           110,00                  
 0
Preference Share
Capital Subscription 110,0
  Receivable   00                

                               
d. Preference Share 400,00
Capital Subscribed     0                  
Prefere
nce
Share 400,0
  Capital       00                

                               
23. Last September 6, 2010, Brown Co. issued 2,000 shares of its P10 par value  
ordinary share capital in exchange for a piece of land to be held for a future plant
site. Brown Co.'s ordinary share capital was listed and traded at P28 per share on  
the same date. The land has no known market value. How much is the increases
in Shareholder's equity resulting from this exchange?  

                               
c.
a. P0       P56,000                    
d.
b. P20,000     P34,000                    

                               

For items 24-25                            

Violet Corp., was organized on January 1, 2010 with authorized capital of 100,000  
ordinary shares, P20 par value. During 2010, Violet Co. had the following
transactions affecting the shareholder's equity.  

                               
Jan. 10 Issued 25,000 shares at
P22 per share                      
Mar.25 Issued 1,000 shares for legal service when the
fair value was P24 per share                
Sept.30 Issued 5,000 shares for a piece of equipment when
the value was P26 per share.              

                               
24. How much is the balance of the ordinary share capital
account as of September 30?              

                               
c.
a. P620,000     P700,000                    
d.
b. P674,000     P704,000                    

                               
25. Using the information above, what amount should be
reported as additional paid-in capital?            

                               
c.
a. P50,000     P64,000                    
d.
b. 54,000       P84,000                    
                               
For items 26-27                            
Aqua Corp. was incorporated on June 1, 2010 with an authorized 250,000 share of
no-par ordinary share capital, stated value of P15 and 10,000 shares of 10%  
preference share capital, par value P50. Transactions affecting company's share
capital as of June 30,2010 were as follows:  

                               
June 1 Issued 50,000 ordinary
shares for cash at P15 per share.                    
June 5 Issued 50,000 ordinary shares in exchange for assets
with total market value of P900,000.            
June 15 Received subscriptions for 100,000 ordinary share at
P30 and for 5,000 preference shares at P55.            
June 25 Received full payment for subscriptions received on June
15 and the corresponding stock were issued.          

                               
26. What is the total paid in capital in excess of par and stated
value for both ordinary and preference shares?          

                               
c.P1,650,
a. P25,000     000                    
d.P1,675,
b. P300,000     000                    

                               
27. Using the information above, how much is the total
Shareholder's equity?                

                               
c.P4,675,
a. P3,250,000     000                    
d.P4,925,
b. P4,500,000     000                    

                               

For items 28-30                            

The Shareholder's equity of Cecille Corp. revealed the
following on June 30,2010:                

                             
Issued Preference P230,0
share, P100 par value     00                  
Unissued preference shares,
P100 par value   50,000                  
Preference share
premium       80,500                  
Authorized Ordinary share, P15 1,000,0
par value   00                  
Unissued Ordinary 525,00
share, P15 par value     0                  
Ordinary share       275,00                  
premium 0
Ordinary share       50,000                  
subscribed
Retained         190,00                  
earnings 0
Notes payable         400,00                  
0
Subscription receivable -   40,000                  
ordinary (Current)
Revaluation         50,000                  
surplus

Treasury shares         10,000                  

                               
28. How much is the contributed                    
capital of the Corporation?

a. P715,000       c. P755,000                  

b. P980,000       d. P705,000                  

                               
29. How much is the additional paid-in capital                  
of the Corporation?

a. P275,000       c. P355,500                  

b. P80,500       d. P345,500                  

                               
30. How much is the total Shareholder's equity                  
of the Corporation?
a. P1,340,500       c.                  
P1,110,500
b. P1,350,500       d.                  
P1,740,500

                               

For items 31-34                            

ABC Corp. was authorized to issue 200,000 ordinary shares, par value P25.
The transactions that took place during the months of November and    
December are shown below:
   
Nov. 2 Received subscription from incorporators for 50,000 shares
at P30. A downpayment of 40% was received.          
Nov.5 Issued 10,000 shares in exchange for equipment with
a fair value of P400,000.              
Nov. 16 Received subscription for 30,000 shares at P28 with a
downpayment of 20%. The balance due within 30 days.        
Nov.28 Received the balance due from incorporators who subscribed for
35,000 shares on Nov.2. The shares of stock were issued.      
Dec. 16 Received the balance due from incorporators who subscribed for 25,000
shares on Nov.16. The corresponding shares of stock were issued.  
Dec.16 Declared as delinquent shares the subscription for
5,000 shares from subscription on Nov.2            
Dec.20 Paid advertising expenses of P5,000
relative to delinquency sale.                  
Dec. 26 Received payment from highest bidder
and shares were issued.                  
                                
31. How much is the total additional paid-in capital after the
foregoing transactions?              

a. P490,000         c. P250,000                

b. P340,000         d. P90,000                

                             
32. How much is the total Ordinary share capital after
the foregoing transactions?                

a. P1,750,000         c. P1,625,000                
d.
b. P1,875,000         None                  

                               
33. How much is the total Ordinary share capital subscribed
after the foregoing transactions?              

a. P1,250,000         c. P2,000,000                

b. P375,000         d. P2,340,000                

                               
34. How much should be presented as part of
subscription receivable?                  

a. P2,340,000         c. P95,000                

b. P1,500,000         d. P382,000                

                               

                       
KEY ANSWER:

1. T 33. B
2. F 34. 292,000
3. T
4. F
5. T
6. F
7. F
8. T
9. T
10. F
11. T
12. T
13. T
14. T
15. T
16. D
17. A
18. C
19. A
20. D
21. D
22. A
23. C
24. A
25. D
26. D
27. D
28. 1,110,500
29. C
30. A
31. A
32. B