DIVINE WORD COLLEGE OF LEGAZPI

SBMA – Business Regulatory Framework, MT Exam

Melquiades A. Cancela, CPA

NAME: FRIA MAE ABELLANO Day: TIME: ______SCORE _____Grade:_______

TOS: (1) Remembering – 10 questions = 10 points : Total 80 points

Ans. # Questions represented by numbers. Choose the letter representing your answer
1 It refers to the accumulated amount of money annually deducted from net surplus which shall
2 be less than fifty (50%) per cent for the first year of operations after resignation and at least
10% of the net surplus thereafter, intended not for the allocation or distribution to the
members but for protection and stability of the cooperative, commonly referred to as the
Reserve Fund. (1) Surplus Fund (2) Accumulated Reserve (3) Savings Fund (4) Net Surplus
2 It refers to any business activity or livelihood engages in by the cooperative where such
1 cooperative generates savings. (1) Business Transaction (2) Cooperative Purpose (3) Livelihood
Engagement (4) Members Meeting
3 The two (2) characteristics or features of negotiable instruments are: (1) Negotiability and
1 accumulation of secondary contracts (2) Negotiability and replacement of money (3) Creation
of primary contract and accumulation of secondary contracts (4) Transaction facility and ease in
negotiability.
4 An complete features example of a negotiable instrument (1) Postal Money Order (2) A crossed
4 Check (3) Letter of Credit (4) Promissory Note
5 In its broadest sense, it refers to a written promises or obligations that arise out of commercial
3 transactions from use of such instruments as promissory notes and Bills of Exchange. (1)
Commercial Check (2) Commercial Obligation (3) Commercial Paper (4) Commercial
Transactions
6 It must be necessary that the negotiable instrument document must be (1) notarized (2)
3 transferred (3) in writing (4) addressed to the drawer.
7 An example of this kind of document is a check that read as follows: “Pay to Juana Torre”. (1)
2 Negotiable instrument (2) non-negotiable instrument (3) Stale Check (4) Pay Check
8 It is essentially an order made by one person to another to pay money to a third person (1)
3 Promissory Note (2) A commercial Check (3) a Bill of Exchange (4) a Manager’s Check
9 The counterfeit –making of fraudulent alteration of any writing, and may consist in the signing
2 of another’s name or alteration of an instrument in the name, amount, description of the
person and the like, with intent thereby to defraud. (1) counterfeiting (2) forgery (3) duplication
(4) Procuration
10 A person who qualifies as a holder but does not meet all the conditions to qualify as a holder in
1 due course is called (1) ordinary holder (2) holder for value (3) holder in god faith (4) holder in
honor
TOS – (2) Understanding: 10 Questions = 10 points
1 It refers to the certificate issued annually by the CDA to cooperatives which comply with the
3 requirements provided in the CDA-Memorandum circular as amended. (1) Certificate of Tax
exemption (2) certificate of Membership (3) Certificate of good Standing (4) Certificate of Good
moral character of the cooperative officers
2 It refers to the certificate/ruling issued by the BIR granting exemption to a cooperative, which is
2 valid for a period of five (5) years from the date issue. (1) Certificate of Filing (2) certificate of
Tax Exemption/Ruling (3) Certificate of cooperative Registration (4) Certification of Tax Refund
3 Briefly stated, it is a contractual obligation to pay money. (1) Bills of Exchange (2) Pay to cash
4 check (3) non-negotiable instrument (4) negotiable instrument
 4 Its special and technical meaning gives warning that the agent has but limited authority, so that
2 it is the duty of the person dealing with him to inquire into the extent of his authority. (1)
Procurement (2) Procuration (3) Pro-ante (4) Pronouncement
5 The immediate, direct, or essential reason which induces a party to enter into a contract. (1)
4 Tender of payment (2) Cause and Effect (3) Inducement (4) Consideration
6 It is any consideration sufficient to support a simple contract (1) Desire (2) Want (3) Value (4)
3 Intent
7 One who has given a valuable consideration for the instrument issued or negotiated. (1) holder
2 for honor (2) holder for value (3) holder for trust (4) defacto holder
8 Something agreed upon as consideration but for some cause, such agreed consideration failed
3 to materialized (1) Failure to Pay (2) Failure to Negotiate (3) Failure of consideration (4) Failure
of negotiation
9 He is one in whose favor a person, without receiving value therefore, signs an instrument for
2 the purpose of lending his credit and enabling said party to raise money upon it. (1)
Accommodator (2) Accommodated party (3) Accommodation borrower (3) Ex-party
Accommodation
10 The transfer of the title to an instrument with the assignee generally taking only such title or
2 rights as his assignor has, subject to all defenses available against his assignor. (1)
Accommodation (2) Assignment (3) Guarantee (4) Transferring of right
TOS – (3) Application: 10 questions = 10 points
The following are example of Negotiable Promissory Note
(1) Payable to Order (2) Payable to bearer
June 30, 2020 June 30, 2020
Legazpi City(2) Legazpi City(2)
P300, 000 (1) P300, 000(1)
(3)For value received, (4)I promise to pay to Thirty days after date, (4)I promise to pay (7) Greg
the(5)order of (7) Greg Poe the (8) sum of three hundred Poe or (5) bearer the (8) sum of Three Hundred Thousand Pesos
Thousand Pesos (P300,000) (6) on or before July 30, 2020, at (P300, 000).
(9( his house at Bry. 16, Legazpi City. (Sgd.) Fernando Guapo(10)
(Sgd.) Fernando Guapo(10)

June 30, 2020(2) June 30, 2020(2)

Legazpi City Legazpi City
P300, 000(1) P300, 000(1)
Thirty days after date, (4)I promise to pay Greg Poe or Thirty days after date, (4)I promise to pay to
(5)order the(8) sum of Three Hundred Thousand Pesos (P300, (5)bearer the (8)sum of Three Hundred Thousand Pesos
000). (P300, 000).
(Sgd.) Fernando Guapo(10) (Sgd.) Fernando Guapo(10)

The numbers below correspond to the significant of the parts of the negotiable instrument. Indicate at the
left (answer column) the words or group of words that signify the importance of the statement as indicated.
J 1 P300,000
I 2 Legazpi City
H 3 For value received
G 4 I promise to pay
F 5 To the order of
E 6 On or before July 30, 2020
D 7 Greg Poe
C 8 Three Hundred Thousand Pesos
B 9 At his house in Brgy. 16, Legazpi City
A 10 Signature of Fernando Guapo
Word or group of words that state the significant of the word or group of words as appearing above
 A The maker of the note. He is the one who promises to pay at the first instance
B Indicate the note where the note is to be paid
C The word Three hundred Pesos precedes the figure of P300,000 indicate the amount which the
maker binds himself to pay
D “Greg Poe” indicate the payee the person to whom the promise or instrument is payable
E “On or before July 30, 2010” Indicate the date of maturity or the time when the promise to pay is to
be fulfilled.
F “to order of” indicate the promise to pay as ordered or commanded by the payee
G “ I promise to pay” signify an absolute and unconditional promise to pay, not the word “might” or
“will probably pay”.
H “for value received” indicate the consideration given the note which may be specified
I “Legazpi City” the place where the contract is executed, while the date “June 30, 2020” the date of
execution
j Figure “ P300, 000” indicate the amount of the note.
TOS – (4) Analysis: 10 questions = 10 points; 10 question = 40 points total 50 points
4 1 Refers to the refund or return to the members of net savings generated from the operations of
the cooperative (1) Net Profit (2) Refund of membership contribution (3) refund of overpayment
(4) Patronage refund
4 2 Refers to the cooperative activity that provides goods and services to members where the
cooperative generates net savings/surplus (1) transactions with non-members (2) export
transactions (3) transactions to members and non-members (4) transactions to members
3 3 The members of which are natural persons (1) tertiary (2) secondary (3) primary (4) answer not
given
1 4 The members of which are secondary cooperatives (1) tertiary (2) secondary (3) primary (4)
answer not given
1 5 Cooperative with accumulated reserves and undivided net savings of more than ten million pesos
(1) Exempt from income tax (2) subject to income tax (3) should close the cooperative (4) must
register as corporation
4 6 Unrelated income of cooperative shall be: (1) exempt from income tax (2)shall not be reported (3)
shall be separately reported to the BIR (4) shall not be tax exempt
3 7 The quality or attribute of a bill or note whereby it may pass from one person to another similar
to money. (1) legal tender (2) money (3) negotiability (4) acceptability
2 8 Common form of negotiable instrument (1) bill of lading and way bill (2) promissory note and bill
of exchange (3) Checks and deposit slip (4) certificate of stock or property ownership
4 9 The negotiability of a negotiable instrument is affected by (1) not being dated (2) value is not
given or specified (3) bears no seal (4) not signed
4 10 The date of the promissory note must be due (1) date before the note (2) the date after the note
(3) not necessarily indicated (4) at the discretion of the maker
In answering 11 to 20, write your answer in a separate sheet of paper: Define or explain: 4 points each (40)
11. What is abnormal negotiable instrument?
Abnormal instruments are incomplete but delivered and undelivered,
complete but undelivered and forgery. Instruments that are incomplete but
delivered have authority to fill up the blanks meaning the holder or the
person in possession has prima facie authority to complete an incomplete
instrument by filling up blanks therein. Has authority to put up any amount
meaning a signature on a blank paper delivered in order that may be
converted into a negotiable instrument operates as a prima facie authority to
fill it up as such for any moment. Has right against a prior to completion if
filled up strictly in accordance with the authority given and within
reasonable time.
12. What is incomplete but delivered instrument?
The instruments is complete but delivered instrument when the holder has
prima facie authority to complete the instrument, completion to be done
within a reasonable time and according to authority given and, holder in due
course of the instrument previously completed in breach of instructions can
enforce the same as if regularly completed. Incomplete but delivered
instruments are instruments where blanks are left or there are information
that is left blank such as date, amount, or name of payee, when delivered, if
it’s not filled in accordance with the authority expressly or signer’s
authority it is considered invalid.
13. What is incomplete but undelivered instrument?
An incomplete but undelivered instrument is when completed and
negotiated without authority of signer, not valid contract to any holder,
against any person whose signature was placed before delivery. When an
incomplete and undelivered instruments is in hands of holder, there is a
prima facie presumption of delivery, which the maker may rebut by proof of
non-delivery. Custody of an incomplete has been entrusted to another, who
wrongfully completes and negotiates it to a holder in due course, delivery to
an agent or custodian is a sufficient delivery to bind the drawer or maker.
14. What is complete but undelivered instrument?
Negotiable Instruments that are complete but undelivered is when the
instrument that negotiable is completed meaning contains all information
needed but has not yet been delivered. There are effects that must be
considered which were that between immediate parties and a remote party,
holder in due course delivery to be effectual must be made under authority
of maker, drawer or acceptor, endorser, if the instrument is in the hands of a
holder in due course, all prior deliveries are conclusively presumed valid.
15. What is a forged signature?
Forgery is meant the counterfeit-making or fraudulent alternation of any
writing, and may consist in the signing of another’s name or the alternation
of an instrument in the name, amount, description of the person and the like,
with intent thereby to defraud. When a signature is forged or made without
the authority of the person whose signature it purports to be, it is wholly
inoperative, and no right to retain the instrument, or to give a discharge
therefor, or to enforce payment thereof against any party thereto, can be
acquired through or under such signature unless the party against whom it is
sought to enforce such right is precluded from setting up the forgery or want
of authority.
16. What is meant by check with insufficient document?
Checks without sufficient funds are checks written beyond the fund that is
in the account. Checks like this one is bounced and returned to maker.
17. What is a promissory note?
Promissory note is an unconditional promise in writing by one person to
another signed by the maker engaging to pay on demand or at a fixed
determinable future time a sum certain in money to order or to bearer.
18 . Who is a drawer?
Drawer means a person who signs a check or bill of exchange ordering his
or her bank to pay the amount to the payee. In case of dishonor of check or
bill of exchange by the drawee or the acceptor, the drawer of such check or
bill of exchange needs to compensate the holder such amount. But, the
drawer needs to receive due notice of dishonor.
19. What is a negotiable instrument?
Negotiable Instrument is a written contract for the payment of money which
by its form and on its face is intended as a substitute for money and passes
from hand to has as money, so as to give the holder in due course the right
to hold the instrument and collect the sum for himself.
20. What is a bill of exchange?
Bill of exchange is an unconditional order in writing addressed by one
person to another, signed by the person giving it, requiring the person to
whom it is addressed to pay on demand or at requiring the person to whom
it is addressed to pay on demand of at a fixed or determinable future time a
sum certain in money to order or to bearer.
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