Act1110 Quiz No. 1 Legal Structures Questionnaire

Far Eastern University
Sampaloc, Manila
Institute of Accounts, Business and Finance
Department of Accountancy
Quiz No. 1
ACT1110 – Governance, Business Ethics, Risk Management, and Internal Control
Clark Joed C. Otucan, CPA, MBA, CTT
Name: _______________________________ Score: _______________ Grade: _____________

Year and Section: ______________________ Permit No: ___________ Date: ______________
Multiple Choice Questions (1 point each)
1. They are considered as one of the key corporate actors who has the vital role of overseeing the company’s
management and business strategies to achieve long-term value creation. (1.5 pts)
a. Board of directors
b. Top Management
c. Shareholders
d. Stakeholders
2. They are considered as one of the key corporate actors who invest in a corporation by buying its stock and
receive economic benefits in return and are not involved in the involved in the day-to-day management of
business operations. (1.5 pts)
b. Top Management
c. Shareholders
d. Stakeholders
3. They are considered as one of the key corporate actors who is responsible for setting, managing and executing
the strategies of the company, including but not limited to running the operations of the company under the
oversight of the board and keeping the board informed of the status of the company’s operations. (1.5 pts)
b. Top Management
c. Shareholders
d. Stakeholders
4. A __________ partnership is one formed by two or more persons having as members one or more general
partners and one or more limited partners. (1.5 pts)
a. General
b. Limited
c. Universal
d. Particular
5. A(n) __________ is a form of business organization in which two or more business owners share the
management and risk of the business. (1.5 pts)
a. Limited Liability Corporation
b. General Partnership
c. Limited Partnership
d. Corporation
6. A(n) __________ is a legal business entity that is separate and distinct from its owners and officers. (1.5
pts)
a. Sole Proprietorship
b. General Partnership
c. Limited Partnership
d. Corporation
7. A(n) __________ is a form of business organization in which there are some owners who are only liable up
to the extent of the amount of capital invested in the business. (1.5 pts)
a. Sole Proprietorship
b. Limited Partnership
c. General Partnership
d. Intrapreneurship
8. What government agency is entrusted with supervision and regulation of a private corporation? (1.5 pts)
a. Privacy Commission
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b. Anti-Red Tape Authority
c. Securities and Exchange Commission
d. Department of Trade and Industry
9. _____________ are those stockholders or members mentioned in the Articles of Incorporation as originally
forming and composing the corporation, and who are signatories thereof. (1.5 pts)
a. Directors
b. Trustees
c. Corporators
d. Incorporators
10. As a rule, what is the term of corporate existence under the Revised Corporation Code? (1.5 pts)
a. 30 years
b. 40 years
c. 50 years
d. Perpetual existence
11. Three (3) of the following are attributes of a corporation. Which is the exception? (1.5 pts)
a. Created by agreement of the incorporators
b. An artificial being
c. Has right of succession
d. Has powers, attributes, and properties expressly authorized by the law as incidental of its existence
12. The continuation of a corporation’s legal status despite changes in ownership or management. (1.5 pts)
a. Succession
b. Inheritance
c. Dissolution
d. Liquidation
13. The corporate name shall contain any of the following words, except: (1.5 pts)
a. Corporation
b. Incorporated
c. Corp.
d. Co.
14. In order that a person may be selected as a president of a corporation, he must: (1.5 pts)
a. Be a citizen and resident of the Philippines
b. Not be a stockholder or director of a competitor corporation
c. Not be the president of any other corporation
d. Be a director of the corporation
15. The factors for the application of the doctrine of piercing the corporate veil are the following, except:
a. Stock ownership by one or common ownership of both corporations
b. Identity of directors and officers
c. The manner of keeping corporate books and records
d. Identity of the stockholders
16. Corporations which have capital stock divided into shares and are authorized to distribute to the holders of
such shares dividends or allotments of the surplus profits on the basis of the shares held.
a. Non-stock corporation
b. Stock corporation
c. Corporation aggregate
d. Corporation by prescription
17. Is one where no part of its income is distributable as dividends to its members, trustees, or officers.
a. Non-stock corporation
b. Stock corporation
d. Corporation by prescription
18. One which has exercised corporate powers for an indefinite period without interference on the part of the
government.
a. Foreign corporation
b. Domestic corporation
c. Corporation by prescription
d. Corporation by estoppel
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19. A corporation incorporated under the laws of the Philippines.
20. A corporation is formed, organized or existing under any laws other than those of the Philippines and whose
laws allow Filipino citizens and corporations to do business in its own country or State.
21. A corporation consisting of more than one member.

a. Open corporation
b. Close corporation
d. Corporation sole
22. A corporation consisting of only one member for the purpose of administering and managing, as trustee, the
affairs, property and temporalities of any religious denomination, sect or church.
a. Open corporation
d. Corporation sole
23. A corporation organized for religious purposes.

a. Ecclesiastical corporation
d. Lay corporation
24. A corporation organized for charitable purposes.

a. Ecclesiastical corporation
b. Eleemosynary corporation
c. Civil corporation
d. Lay corporation
25. 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 incidental to its existence.
a. Corporation sole
b. Corporation
c. Partnership
d. Sole proprietorship
26. A corporation created in strict or substantial conformity with the mandatory statutory requirements for
incorporation and the right of which to exist as a corporation cannot be successfully attacked or questioned
by any party even in a direct proceeding for that purpose by the State.
a. Government-owned or controlled corporation
b. Quasi-public corporation
c. De jure corporation
d. De facto corporation
27. A class of stock entitling the holder to vote on corporate matters, to receive dividends after other claims and
dividends have been paid (especially to preferred shareholders), and to share in assets upon liquidation.
a. Common stock
b. Preferred stock
c. Treasury stock
d. Watered stock
28. Is one which entitles the holder thereof to certain preferences over the holders of common stock.
a. Common stock
b. Preferred stock
c. Treasury stock
d. Watered stock
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29. There may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of
the existence of unrestricted retained earnings in the books of the corporation, and upon such other terms and
conditions as may be stated in the articles of incorporation, which terms and conditions must also be stated
in the certificate of stock representing said shares.
a. Par value stock
b. No par value stock
c. Redeemable stock
d. Class A stock
30. A private corporation which have accepted from the State the grant of franchise or contract involving the
performance of public duties but which are organized for profit.
31. The following are limitations on no par value stocks, except:

a. It can be issued for a consideration of at least P3.00.
b. It is deemed fully paid and non-assessable.
c. The entire consideration for its issuance constitutes capital so that no part of it should be distributed
as dividends.
d. It cannot be issued as preferred shares.
32. Shares with a par value fixed in the articles of incorporation and the certificate of stock.
a. Par value stock
b. No par value stock
c. Redeemable stock
d. Class A stock
33. Is one which has no preference and entitle the shareholder to a pro rata division of the profits, if any.
a. Preferred stock
b. Common stock
c. Voting share
d. Non-voting share
34. The due incorporation of any corporation claiming in good faith to be a corporation, and its right to exercise
corporate powers, shall not be inquired into collaterally in any private suit to which such corporation may be
a party.
35. All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as
general partners for all debts, liabilities and damages incurred or arising as a result thereof.
36. The stockholder or members mentioned in the articles of incorporation as originally forming and composing
the corporation and who are signatories thereof.
a. Corporators
b. Board of directors
c. Board of trustees
d. Incorporators
37. This is the maximum amount fixed in the articles of incorporation that may be subscribed and paid by the
stockholders of the corporation.
a. Outstanding capital stock
b. Paid-up capital stock
c. Authorized capital stock
d. None of the above
38. Shares classified in the articles of incorporation which may be given certain rights and privileges (e.g.,
dividend payments) not enjoyed by the owners of other stocks.
a. Over-issued stock
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b. Redeemable share
c. Convertible share
d. Founders’ share
39. Is a person who brings about or cause to bring about the formation and organization of a corporation
a. Corporators
b. Promoter
c. Underwriter
d. Incorporators
40. It applies when persons assume to form a corporation and exercise corporate functions and enter into business
relations with third persons.
a. De facto corporation
b. Corporation by prescription
41. Shares without a right to vote.

a. Preferred stock
b. Common stock
c. Voting share
d. Non-voting share
42. Is the governing body in a stock corporation

a. Corporators
d. Incorporators
43. These are shares usually preferred, which by their terms are redeemable at a fixed date, or at the option of
either issuing corporation, or the stockholder, or both at a certain redemption price.
a. Over-issued stock
b. Redeemable share
44. Each share shall be equal in all respects to every other share except as otherwise provided in the articles of
incorporation and stated in the certificate of stock.
a. Doctrine of indivisibility of shares
b. Doctrine of divisibility of shares
c. Doctrine of equality of shares
d. Doctrine of corporate opportunity
45. Is the governing body in a non-stock corporation

a. Corporators
d. Incorporators
46. Subscriptions to the capital stock of a corporation constitute a fund to which the creditors have a right to look
for the satisfaction of their claims.
a. Trust fund doctrine
b. Doctrine of indivisibility
c. Doctrine of corporate opportunity
d. None of the above
47. These are shares of stock which have been issued and fully paid for, but subsequently reacquired by the
issuing corporation by purchase, redemption, donation or through some other lawful means.
a. Treasury stock
b. Redeemable share
48. Stock issued for a consideration less than the par or issued price thereof or in any other form other than cash
value in excess of its fair value.
a. Preferred stock
b. Watered stock
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c. Optional share
49. It refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public
needs whether governmental or proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at
least 51% of its capital stock.
a. Private corporation
b. Closed corporation
c. Government-owned or controlled corporation
d. Local government unit
50. The following are the characteristics of a corporation, except:

a. Artificial being
b. Created by meeting of the minds
c. Right of succession
d. Power expressly authorized by law or incident to its existence
Modified True or False (2 points each)
51. I. Any application of the doctrine of piercing the corporate veil should be done with caution.
II. A corporation exercises its powers through its board of directors and/or its duly authorized officers and
agents.
a. Only Statement I is correct
b. Only Statement II is correct
c. Both statements are correct
d. Both statements are incorrect
52. I. A corporation is a juridical entity vested with a legal personality separate and distinct from those acting for
an in its behalf and, in general, from the people comprising it.
II. Not every stockholder or officer can bind the corporation considering the existence of a corporate entity
separate from those who compose it.
53. I. Well-settled is the principle that the corporate mask may be removed or the corporate veil be pierced when
the corporation is just an alter ego of a person or of another corporation.
II. It is a basic principle in Corporation Law that a corporation has a personality which is the same as the
officers or members who compose it.
54. I. Property acquired by a corporation is the property of stockholders or members.

II. A corporation exercises said powers through its board of directors and/or its duly authorized officers and
agents.
55. Two requisites must concur before one may be classified as a stock corporation, namely:
I. That it has capital stock divided into shares.
II. That it is authorized to distribute dividends and allotments of surplus and profits to its members.
56. I. Non-stock corporations can distribute 10% of their income to their members.
II. Non-stock corporations are organized for charitable, religious, educational, professional, cultural,
recreational, fraternal, literary, scientific, social, civil service, or similar purposes.
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57. I. One of the rights of a stockholder is the right to participate in the control and management of the corporation
which is exercised through his vote.
II. The right to vote is a right inherent in and incidental to the ownership of corporate stock, but as such is
not a property right.
58. I. In non-stock corporation, the voting rights does not attach to membership.
II. Members vote as persons, in accordance with the law and the by-laws of the corporation.
59. I. A limited partnership is one formed by two or more persons having as members one or more general
partners and one or more limited partners.
II. The limited partners are not personally liable for the obligations of the partnership beyond the formers’
capital contributions. (2.5 pts)
60. I. General partners are those who can be held liable to third persons for partnership obligations even to the
extent of their separate and personal assets.
II. In general, the retirement, death, insolvency, insanity, or civil interdiction of a general partner dissolves
the partnership. (2.5 pts)
61. I. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing
to be associated in the carrying on, as might be distinguished from the winding up of the business.
II. The partnership debts are paid out of the common fund of the partnership as well as the separate properties
of the general partners. (2.5 pts)
62. I. As a rule, when a partnership is dissolved, any of the partners cannot bind the partnership.
II. As a general rule, the dissolution of the partnership does not in itself discharge the existing liability of any
partner. (2.5 pts)
63. I. A limited partner whose surname appears in the name of the partnership is liable as a general partner to the
partnership’s creditors who extend credit to the partnership without the actual knowledge that he is not a
general partner.
II A limited partner shall not become liable as a general partner unless, in addition to the exercise of his rights
and powers as a limited partner, he takes part in the control of the business. However, the said limited partner
does not acquire the rights of a general partner. (2.5 pts)
64. I. As a rule, the interest of a general partner is not assignable unless consented to by all the other partners.
II. The general partners may contribute money, property, or industry. (2.5 pts)
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65. I. Partners by estoppel are those who are not really partners but represent themselves or consent to another
or others representing them to anyone as partners in an existing partnership or in one that is fictitious or
apparent.
II. Every partner is an agent of the other partners and the partnership itself. (2.5 pts)
66. I. Capitalist partners are those who contribute money or property or both money and property to the common
fund of the partnership.
II. Industrial partners are those who contribute only their industry or labor to the common fund of the
partnership. (2.5 pts)
67. I. The death of a sole entrepreneur leads to the termination of the venture.
II. The sole proprietor maintains complete control over the business and has an unlimited liability. (2.5 pts)
68. I. The provisions governing stock corporations, when pertinent, shall be applicable to non-stock corporations.
II. A non-stock corporation must have shareholders.
69. I. An individual can be a partner in a partnership without investing money or property but by merely
contributing his labor or expertise.
II. An individual may incorporate a corporation alone. (2.5 pts)
70. I. An individual may not be a member of the Board of Directors of a corporation without being a stockholder
of the said corporation.
II. An individual may be a stockholder of a corporation without being part of the Board of Directors of the
said corporation. (2.5 pts)
71. I. The life of the corporation does not depend on the life of any of its stockholders.
II. The liability of the stockholders of a corporation, in general, do not extend up to his or her personal assets
and properties. (2.5 pts)
72. I. Redeemable shares, once redeemed are retired unless reissuance is expressly allowed in the articles of
incorporation.
II. The Corporation Code allows redemption of shares only if there are unrestricted retained earnings in the
books of the corporation.
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73. I. A corporation is a juridical entity vested with a legal personality separate and distinct from those acting for
and, in its behalf, and, in general, from people comprising it.
II. Not every stockholder or officer can bind the corporation considering the existence of a corporate entity
separate from those who compose it. (2.5 pts)
74. I. Well-settled is the principle that the corporate mask may be removed or the corporate veil pierced when
the corporation is just an alter ego of a person or of another corporation.
II. It is a basic principle in Corporation Law that a corporation has a personality which is not the same as the
officers or members who compose it. (2.5 pts)
75. I. De jure corporation is a corporation created in strict or substantial conformity with the mandatory statutory
requirements for incorporation and the right of which to exist as a corporation cannot be successfully attacked
or questioned by any party even in a direct proceeding for that purpose by the State.
II. De facto corporation is the due incorporation of any corporation claiming in good faith to be a corporation,
and its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which
such corporation may be a party. (2.5 pts)
END OF EXAMINATION
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Act1110 Quiz No. 1 Legal Structures Questionnaire

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Far Eastern University

Name: _______________________ Score: _ Grade: _______

Multiple Choice Questions (1 point each)

21. A corporation consisting of more than one member.

23. A corporation organized for religious purposes.

24. A corporation organized for charitable purposes.

31. The following are limitations on no par value stocks, except:

41. Shares without a right to vote.

42. Is the governing body in a stock corporation

45. Is the governing body in a non-stock corporation

50. The following are the characteristics of a corporation, except:

Modified True or False (2 points each)

54. I. Property acquired by a corporation is the property of stockholders or members.

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