CORPORATION: TRUE - O FALSE – X CFAS (Theoretical)

1. Two or more persons can form a 1. The relevance of information is affected

corporation. by its

2. All corporations are established for profit. a. Risk b. Nature

c. Materiality d. All of these
3. All corporations issue shares of stock.
2. Comparability is sometimes sacrificed for
4. A corporation acquires juridical
personality upon filing its Articles of a. Conservatism b. Relevance
c. Reliability d. Objectivity
Incorporation with the SEC.
3. To be relevant, information should
5. All corporators are shareholders.
include which of the following?
6. Churches can be incorporated.
a. Verifiability b. Understandability
7. All banks are incorporated. c. Cost/Benefit d. Feedback value

8. A corporation can issue preference 4. One of the fundamental qualitative

shares only. characteristics of financial statements is

9. A partnership can be a shareholder in a a. Completeness b. Neutrality

c. Timeliness d. Relevance
corporation.
5. A company reports only its total accounts
10. A corporation can be a shareholder in
receivable balance in its balance sheet as
another corporation.
opposed to a complete listing of its
individual customer balance. This is an
Solution example of

1. X a. Adequate disclosure b. Cost/Benefit

c. Materiality d. Conservatism
2. O
Solution
3. X – Non- stock corporation do not issue
1. D
shares of stock.
2. C
4. X – A corporation acquires juridical
personality from the moment its articles of 3. D
inc. is approved by the SEC.

5. X – Corporators of non- stock corporation

are called members.

6. X

7. O

8. X

9. O

10. O
4. D There are only two fundamental
qualitative characteristics- relevance and
faithful representation. As the International
Accounting Standards Board or (IASB)
Conceptual Framework states, if financial
information is to be useful, it must be
relevant and faithfully represents what it
purports to represent. The usefulness of
financial information is enhanced if it is
comparable, verifiable, timely, and
understandable.

5. C