It is an autonomous and duly registered association of persons with a common bond

of interest, who have voluntarily joined together to achieve their social economic
and cultural needs and aspirations by making equitable contributions to the capital
required, patronizing their products and services, and accepting a fair share of
the risks and benefits of the undertaking in accordance with universally accepted
cooperative principles.
A. Corporation
B. Cooperation
C. Cooperative
D. Incorporation
ANSWER: C

The following are Cooperative Principles, except:

A. Involuntary yet open membership
B. Democratic Member Control
C. Autonomy and Independence
D. Member Economic Participation
ANSWER: A

It is a procedure wherein the cooperative assesses its social impact and ethical
performance vis-à-vis its stated mission, vision, goal and code of social
responsibility for coops.
A. Performance Audit
B. Financial Audit
C. Comprehensive Audit
D. Social Audit
ANSWER: D

Refers to an audit on the efficiency and effectiveness of the cooperative as a

whole, its management and officers and its various responsibility centers.
A. Performance Audit
B. Financial Audit
C. Comprehensive Audit
D. Social Audit
ANSWER: A

Any organization, all or majority of whose membership comes from a cooperative

organized for any other purpose different from that of and receives technical,
managerial and financial assistance from a cooperative.
A. Federation of cooperatives
B. Subsidiary cooperative
C. Laboratory cooperatives
D. Primary Cooperatives
ANSWER: B

Composed of minor members and subject to special cooperative rules.

A. Federation of cooperatives
B. Subsidiary cooperative
C. Laboratory cooperatives
D. Primary Cooperatives
ANSWER: C

Three or more primary cooperatives doing the same line of business.

A. Federation of cooperatives
B. Subsidiary cooperative
C. Laboratory cooperatives
D. Primary Cooperatives
ANSWER: A
A type of cooperative member who has complied with all the membership requirements
and entitled to all rights and privileges of membership.
A. Ordinary Member
B. Special Member
C. Regular member
D. Associate member-
ANSWER: C

The following are the membership requirements in a Cooperative, except:

A. Of Legal age
B. Residency
C. Filipino citizen
D. Share capital contribution
ANSWER: B

The following are the proprietary rights of a member in a Cooperative, except:

A. Right to elect or remove directors
B. Share during liquidation
C. Transfer shares
D. Interest on share capital and patronage dividend
ANSWER: A

It is an artificial being created by operation of law, having the right of

succession and the powers, attributes, and properties expressly authorized by law
or incident to its existence.
A. Agency
B. Company
C. Association
D. Corporation
ANSWER: D

The following are attributes of a Corporation except:

A. Has the powers, attributes and properties expressly authorized by law or
incident to its existence
B. Can be awarded of moral damages because it has reputation to protect.
C. Has the right of succession.
D. An Artificial Being
ANSWER: B

It is a type of a corporation wherein sshareholders are limited to selected persons

or members of a family.
A. Close Corporation
B. Private Corporation
C. Educational Corporation
D. Eleemosynary Corporation
ANSWER: A

A type of corporation organized for a charitable purpose.

A. Close Corporation
B. Private Corporation
C. Educational Corporation
D. Eleemosynary Corporation
ANSWER: D

5. A corporation shall be considered a Filipino corporation if the Filipino

ownership of its capital stock is at least 60%, and where the 60-40 Filipinoalien
equity ownership is NOT in doubt.
A. Granfather Rule
B. Control Test
C. Doctrine of Separate Juridical Entity
D. Doctrine of piercing the corporate veil
ANSWER: B

Shareholders have no claim on corporate property as owners, but mere expectancy or

inchoate right to the same upon dissolution of the corporation after all corporate
creditors have been paid.
A. Granfather Rule
B. Control Test
C. Doctrine of Separate Juridical Entity
D. Doctrine of piercing the corporate veil
ANSWER: C

Stocks which are given preference by the issuing corporation in dividends and the
distribution of assets of the corporation in case of liquidation or such other
preferences as may be stated in the AOI which do not violate the Corporation Code.
A. Par value shares
B. Common Shares
C. Preferred Shares
D. Redeemable Shares
ANSWER: C

These are shares with a stated value set out in the Articles of Incorporation whose
value will remain the same regardless of the profitability of the corporation.
A. Par value shares
B. Common Shares
C. Preferred Shares
D. Redeemable Shares
ANSWER: A

These are shares which have been issued and fully paid for, but subsequently re-
acquired by the issuing corporation by purchase, redemption, donation or through
some other lawful means.
A. Watered Stocks
B. Treasury Shares
C. Voting Shares
D. Capital Stock
ANSWER: B

They are stocks issued for a consideration less than its par or issued value or for
a consideration in any form other than cash, valued in excess of its fair value.
A. Watered Stocks
B. Treasury Shares
C. Voting Shares
D. Capital Stock
ANSWER: A

The following are the corporation's corporate powers, except:

A. Issue or sell stocks to subscribers and sell treasury stocks.
B. Enter into merger or consolidation with other corporations.
C. Adopt and use a corporate seal.
D. Sue and be sued in the name of the stockholders
ANSWER: D

They are acts which a corporation is not empowered to do or perform because they
are not conferred by its Article of Incorporation or by the Corporation Code, or
not necessary or incidental to the exercise of the powers so conferred.
A. Acts of Interlocking Directors
B. Ultra vires acts
C. Voting Trust Agreement
D. Acts by the Proxy
ANSWER: B

Statement A: Doctrine of individuality of subscription implicitly sets forth the

doctrine that subscription is one entire and indivisible contract. Statement B: If
the stockholder has not paid the full amount of his subscription, he cannot
transfer part of it in view of the indivisible nature of subscription contract.
A. Only Statement A is true.
B. Only Statement B is true.
C. Both Statements are true.
D. Both Statements are false.
ANSWER: C

Vote requirement to enter into management contract.

A. Majority of the BOD/BOT and approval by stockholders owning at least the
majority of the outstanding capital stock/majority of members of both the managing
and the managed corporation.
B. Majority of the BOD/BOT or approval by stockholders owning at least the majority
of the outstanding capital stock/majority of members of both the managing and the
managed corporation.
C. 2/3 of the BOD/BOT and approval by stockholders owning at least the majority of
the outstanding capital stock/majority of members of both the managing and the
managed corporation.
D. 2/3 of the BOD/BOT or approval by stockholders owning at least the majority of
the outstanding capital stock/majority of members of both the managing and the
managed corporation.
ANSWER: A

It is an option privilege of an existing stockholder to subscribe to a

proportionate part of shares subsequently issued by the corporation before the same
can be disposed of in favor of others.
A. Appraisal Right
B. Proprietary Right
C. Remedial Rights
D. Pre-emptive Right
ANSWER: D

It is the right to withdraw from the corporation and demand payment of the fair
value of the shares after dissenting from certain corporate acts involving
fundamental changes in corporate structure.
A. Appraisal Right
B. Proprietary Right
C. Remedial Rights
D. Pre-emptive Right
ANSWER: A

A suit brought by the shareholder in his own name against the corporation when a
wrong is directly inflicted against him.
A. Representative Suit Derivative Suit
B. Derivative Suit
C. Remedial Rights
D. Individual Suit
ANSWER: D

A suit by a shareholder to enforce a corporate cause of action. The corporation is

a necessary party to the suit, and the relief which is granted is a judgment
against a third person in favour of the corporation.
A. Representative Suit Derivative Suit
B. Derivative Suit
C. Remedial Rights
D. Individual Suit
ANSWER: B

The following are requisites of a valid Corporate Act by the Board of Directors,
except:
A. The act must be within the powers conferred on the Board.
B. The Board must act as a body in a meeting.
C. Act must be supported by a 2/3 of the quorum.
D. There must be a validly constituted meeting.
ANSWER: C

Directors cannot be held liable for mistakes or errors in the exercise of their
business judgment if they acted in good faith, with due care & prudence.
A. Doctrine of Immunity
B. Doctrine of Limited Liability
C. Business Judgment Rule
D. Special Facts Doctrine
ANSWER: C

It is contract wherein a person binds himself to render some service or to do

something in representation or on behalf of another, with the consent or authority
of the latter
A. Contract of Sale
B. Contract of Agency
C. Contract of Partnership
D. Contract of Loan
ANSWER: B

Statement 1: One who acts through an agent in law does the act himself. Statement
2: In an agent-principal relationship, the personality of the principal is extended
through the facility of the agent
A. Both Statements are true.
B. Both Statements are false.
C. Only Statement 1 is true.
D. Only Statement 2 is true.
ANSWER: A

Statement 1: The appointment of agency may be oral, unless the law requires a
specific form. Statement 2: As to the agent, acceptance must always be express.
A. Both Statements are true.
B. Both Statements are false.
C. Only Statement 1 is true.
D. Only Statement 2 is true.
ANSWER: C

Statement 1: An agent must have legal capacity to enter into the contract of
agency, although he may not have capacity to enter into the particular contract
subject of agency. Statement 2: Juridical persons such as corporations and
partnerships can be principals only.
A. Both Statements are true.
B. Both Statements are false.
C. Only Statement 1 is true.
D. Only Statement 2 is true.
ANSWER: C

The following are the kinds of contract of agency as to business covered, except:
A. Universal
B. General
C. Specific
D. Special
ANSWER: C

Agency by estoppel is when:

A. The principal manifested a representation of the agent’s authority or knowingly
allowed the agent to assume such authority.
B. An agent acts in his own name.
C. Agent acts are done in accordance with the principal’s manifestations of express
consent.
D. Agents are authorized to do some particular act or to act upon some particular
occasion
ANSWER: A

Attorney-at-law is:
A. One who is given authority by his principal to do a particular act not of a
legal character. In its strict legal sense, it means an agent having a special
authority.
B. One whose business is to receive and sell goods for a commission, being
entrusted with the possession of the goods involved in the transaction.
C. One whose business is to sell property for others to the highest bidder at a
public sale
D. One whose business is to represent clients in legal proceedings;
ANSWER: D

Attorney-in-fact is:
A. One who is given authority by his principal to do a particular act not of a
legal character. In its strict legal sense, it means an agent having a special
authority.
B. One whose business is to receive and sell goods for a commission, being
entrusted with the possession of the goods involved in the transaction.
C. One whose business is to sell property for others to the highest bidder at a
public sale
D. One whose business is to represent clients in legal proceedings;
ANSWER: A

One whose business is to act as intermediary between two other parties.

A. Auctioneer
B. Broker
C. Commission Agent
D. Attorney-in-fact
ANSWER: B

Statement 1: If the act is done within the principal's authority but in the name of
the agent, the agent and the principal are solidarily liable in favor of the person
with whom he has contracted, except when the contract involves things belonging to
the principal. Statement 2: If the act is done within the principal's authority
and in the name of the principal, the principal is bound to comply with the
obligations contracted and the agent is personally liable to the party with whom
he contracts.
A. Both Statements are true.
B. Both Statements are false.
C. Only Statement 1 is true.
D. Only Statement 2 is true.
ANSWER: B

It is charter of the corporation.

A. By Laws
B. Articles of Incorporation
C. Secretary Resolution
D. Subscription Agreement
ANSWER: B

These are positions provided for in the by-laws or under the Corporation Code in
the by-laws or under the Corporation Code.
A. Corporate Employees
B. Shareholders
C. Corporate Officers
D. Subscribers
ANSWER: C

It is an arrangement created by one or more stockholders for the purpose of

conferring upon a trustee or trustees the right to vote and other rights pertaining
to the shares for a period not exceeding five (5) years at any time.
A. Voting Trust
B. Proxy Rights
C. Proprietary Rights
D. Subscription Rights
ANSWER: A

Right to Dividends is absolute.

A. True only if there is net surplus.
B. False because right to Dividends can be denied even if there is net surplus.
C. True only if declared by Board of Directors.
D. False because of the application of Doctrine of Limited Liability.
ANSWER: C

The following are requirements to exercise of appraisal right, except:

A. Stockholder must have voted against the corporate act.
B. Stockholder must make a written demand on the corporation within 30 days after
the vote was taken for payment of the fair value of his shares on the said date.
C. Stockholder must submit the certificates to the corporation for notation within
ten (10) days after demand for payment. Otherwise, right to appraisal may be
terminated at the option of corporation.
D. Stockholder must submit a written demand right after the vote against the
corporate act.
ANSWER: D

They exercise the corporate powers of the corporation including the control of all
business conducted and all property of such corporation.
A. Subscribers
B. Board of Directors or Trustees.
C. Stockholders or Members
D. Incorporators
ANSWER: A

The following are the limitations on the sole powers of Board of Director or
Trustees, except:
A. Removal of director
B. Amendments of AOI
C. Exercise Judgment Rule
C. Declaration of stock dividends
ANSWER: C

No delinquent stock shall be voted.

A. True
B. False
C. True only if declared delinqent.
D. False since delinquent stocholders will still remain as stockholders unless
removed.
ANSWER: A

Board of Directors liability for issuing Watered Stocks is:

A. Subsidiary
B. Primary
C. Jointly
D. Solidarily
ANSWER: D

The fiduciary position of insiders, directors, and officers prohibits them from
using confidential information relating to the business of the corporation to
benefit themselves or any competitor corporation in which they may have a mere
substantial interest.
A. Special Facts Doctrine
B. Inside Information
C. Rule on Abstention
D. Piercing the Veil of Corporate Entity
ANSWER: B

Certificate of stock shall be issued to a subscriber only if:

A. Upon full amount
B. Upon Subscription
C. Upon declaration of dividends
D. Upon aproval bt the Board of Directors
ANSWER: A

The entire subscription must be paid first before the certificates of stock can be
issued.
A. True
B. False
C. True only if declared by the Board of Directors
D. False partial payment is allowed.
ANSWER: A

What is considered as the 'Situs' of the Shares of Stock?

A. Domicile of the owner of a certificate
B. Address of the place where the stocks were subscribed
C. Domicile of the Corporation
D. Address of the place of residence of the owner of the shares of stocks
ANSWER: C

These are shares for which the corresponding subscription or balance remains unpaid
after a grace period of 30 days from the date specified in the contract of
subscription or from the date stated in the call made by the BOD.
A. Unpaid Shares
B. Redeemed Shares
C. Watered Share
D. Delinquents Shares
ANSWER: D

Shares of stock so issued are personal property and may be transferred.

A. True only if the Corporation is not a Closed Corporation
B. False because shares of stock are not personal properties.
C. True regardless of any type of corporation
D. False because ownership of shares of stock is not yet vested unles declared by
the Board
ANSWER: A

It is the is the extinguishment of the franchise a corporation and the termination

of its corporate existence or business purpose.
A. Expiration
B. Dissolution
C. Liquidation
D. Rehabilitation
ANSWER: B

It is a process by which all the assets of the corporation are converted into
liquid assets in order to facilitate the payment of obligations to creditors, and
the remaining balance if any is to be distributed to the stockholders.
A. Expiration
B. Dissolution
C. Liquidation
D. Rehabilitation
ANSWER: C

A special form of corporation, usually associated with clergy and consists of one
person only and his successors, who are incorporated by law to give some legal
capacities and advantages.
A. Closed Corporation
B. De Jure Corporation
C. De Facto Corporation
D. Corporation Sole
ANSWER: D

It is when a corporation absorbs the other and remains in existence while the
others are dissolved.
A. Consolidation
B. Merger
C. Joint Venture
D. Subsidiary Corporation
ANSWER: B

It is when a new corporation is created, and consolidating corporations are

extinguished
A. Consolidation
B. Merger
C. Joint Venture
D. Subsidiary Corporation
ANSWER: A