Corporation Testbank With Answer Key PDF

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Which of the following cannot be lawfully exercised by a non-stock corporation? a. Pay dividend b. Elect trustees c. Amend the Articles of Incorporation d. Adopt by-laws A bond issue to pay-off prior floating indebtedness of the corporation issuing it is called a. Convertible bond b. Equipment bond ...

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1.

Which of the following cannot be lawfully exercised by a non-stock corporation? a. Pay dividend b. Elect trustees c. Amend the Articles of Incorporation d. Adopt by-laws

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A bond issue to pay-off prior floating indebtedness of the corporation issuing it is called a. Convertible bond b. Equipment bond c. Collateral bond d. Funding bond

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A bond secured by stocks or other bonds or both which are owned by the debtor, the securities being deposited with a trustee for the bondholder is called: a. Mortgage bond b. Collateral trust bond c. Equipment bond d. Debenture bond Involuntary dissolution of the corporation is caused by a. judicial decree of forfeiture or by order of the SEC. b. legislative enactment. c. failure to organize formally and commence the transaction of its business within two years from the date of incorporation. d. All of the above. To revoke the power granted to the board to make the bylaws. a. Majority vote of the board and of the outstanding capital stock of the members b. 2/3 of the outstanding capital stock of the members. c. Majority of the quorum of the board and 2/3 of the outstanding capital stock of the members. d. Majority of the outstanding capital stock or of the members.

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A corporate officer or director cannot take advantage their personal benefit in business opportunity which the corporation is financially able to undertake. a. Doctrine of corporate fiction b. Trust fund doctrine c. Doctrine of corporate opportunity d. Doctrine of limited capacity

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One of the following does not require stockholder’s approval. a. Merger or consolidation b. Change of corporate name c. Investment of corporate funds for a purpose outside of the main purpose of the corporation d. Declaration of cash dividend

8.

The required minimum authorized capital stock for stock corporation is: a. Not less than P5,000 b. 25% must be subscribed and 25% must be paid c. At least 25% must be subscribed and at least 25% must be paid and in no case shall it be less than P5,000 d. None

9.

Which of the following must be contained in a corporation’s Articles of Incorporation? a. Names of stockholders b. Name of temporary treasurer c. Provisions for issuance of par and no par value shares d. Quorum voting requirement

10. Shares deposited by the seller or his agent with a bank or third party to be delivered to the buyer or subscriber only upon the fulfillment of the stipulated suspensive condition a. Promotion shares b. Founders shares c. Redeemable shares d. Escrow shares 11. A corporation cannot be an incorporator in the Philippines because only natural persons may become incorporators, except a. Cooperative as incorporator of rural bank b. Eleemosynary corporations c. Charitable organizations incorporated under the Philippines laws d. Corporation sole 12. Every decision of the directors or trustees shall be valid as a corporate act at which there is quorum by a. Majority of all members of the board b. Majority of the directors or trustees present c. 2/3 vote of the members of the board d. 2/3 vote of the directors or trustees present 13. The following are expressed powers of a corporation, except: a. To sue and be sued b. To adopt and use a corporate seal c. To amend its Corporate Charter d. None of the above 14. The right of pre-emption shall not apply: a. When such profit is denied in the corporate charter b. To share to be issued in compliance with the laws requiring stock offering or minimum stock ownership by the public c. To share to be issued in good faith with the approval of the stockholders owning 2/3 of the outstanding capital stock in exchange for property needed for corporate purpose of a previously contracted debt d. All of the above 15. Ultra vires act a. Acts which are beyond the powers expressly or impliedly conferred upon the corporation b. Unenforceable c. May be ratified by the stockholders d. All of the above 16. The difference of a proxy and a voting trust agreement is a. Proxy is required to be notarized b. Voting trust agreement is not required to be notarized c. Presence of the stockholder in the meeting where the proxy is given automatically cancels the proxy d. Voting trust must only be written

17. A, B, C, D and E organized a corporation. An article of incorporation was prepared, signed and acknowledge before a notary public and filed with the SEC. The corresponding certificate of incorporation was issued. It turned out, however, that A, B and C are not residing in the Philippines. What is the status of the corporation? a. De jure corporation b. De facto corporation c. Corporation by estoppel d. None of the above 18. The SEC may reject the article of incorporation or disapproved any amendments thereto if a. The purpose or purposes of the corporation patently unconstitutional, illegal or immoral b. The treasurer’s affidavit concerning in the amount of capital stock subscribed and/or paid is false c. The required percentage of ownership of the capital stock to be owned by the citizen of the Philippines has not been complied with d. All of the above 19. Incorporators a. Any number of natural persons not less than 5 but more than 15 b. Must own or be subscriber to at least 1 share of the capital stock of the stock corporation to be formed c. Need not be citizen of the Philippines d. All of the above. 20. Director or trustees who willfully and knowingly vote for or assent to patently unlawfully act of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty shall be liable a. As a trustee for the corporation b. Criminally for violation of the corporation code c. Jointly and severally liable for the damages suffered by the corporation d. None of the above 21. Which of the following is(are) valid consideration for the purchase of stocks of a corporation? I. Real estate II. A negotiable promissory note in money III. Monetary consideration for services to be performed a. I only b. II only c. Both I and III d. Both II and III 22. Suppose “X’ Corporation has an authorized capital stock of 100,000 divided into 1000 shares of stock with par value of 100 each Subscribers: A – 100 shares and paid 8,000 B – 160 shares and paid 100 C – 250 shares and paid 4,000 D – 50 shares and paid 5,000 E – 200 shares and paid 600 Which of the following subscription will qualify the Presubscription requirement of Incorporation? a. Combination of A and E b. Combination of C and D c. Combination of A and B d. All of the above

23. Which of the following must be contained in a Corporation’s Articles of Incorporation? a. Names of stockholders b. Name of the temporary treasurer c. Provisions for issuance of par and no par value shares d. Quorum voting requirement 24. Which of the following is a disadvantage of forming a corporation? a. The existence of the entity is not affected by the personal vicissitudes or of the individual stockholders; b. Free and ready transferability or ownership of shares c. Subservience of minority stockholders to the wishes of the majority subject only to equitable restraints d. The shareholders are not liable for the debts of the business. 25. In the matter if managing the business if the corporation, the exercise if corporate power and handling of corporate properties, this is supreme: a. 2/3 approval of the stockholders of the corporation b. Majority vote of the outstanding capital stockholders of the corporation c. Majority vote of the Board of Directors d. The president of the corporation 26. To adopt by-laws a. Majority of the outstanding capital stock or of the members b. Majority vote of the board and of the outstanding capital stock or of the members c. 2/3 of the outstanding stock or of the members d. Majority vote of the board and 2/3 of the outstanding capital stock or of the members. 27. In no case shall the total yearly compensation of directors exceeds. a. 5% of the net income before income tax during the preceding year b. 10% of the net income before income tax during the preceding year c. 10% of the net income after income tax during the preceding year d. 10% if the net income before income tax during the current year 28. Directors can attend and vote by proxy at board meetings. The articles of incorporation may expressly provide that redeemable shares by a corporation may be purchased upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation. a. True; True b. True; False c. False; False d. False; True

29. Three of the following statement are true; which is the exception? a. Redemption of redeemable stock is required even if the corporation at that time has no unrestricted earnings b. The requirement that at least 25% of authorized capital must be subscribed applies only to non-stock corporation c. Directors are entitled to compensation as a matter of rights d. Derivatives suits can be filed only by dissenting stockholders. 30. Shall constitute a quorum for the transaction of corporate business a. 2/3 of the number of directors or trustee b. Majority of the directors or trustees present c. Majority of the number of directors or trustee as fixed in the articles of incorporation d. ¾ of the number of directors or trustee 31. To issue stock dividends a. Majority vote of the board and 2/3 of the outstanding capital stock b. 2/3 of the outstanding capital stock c. Majority of the outstanding capital stock d. Majority of the quorum of the board and 2/3 of the outstanding capital stock. 32. An action brought by a stockholder against the corporation for direct violation of his contractual rights a. Representative suit b. Individual suit c. Derivative suit d. Corporate suit 33. To enter into management contracts, as a rule a. Majority of the quorum of the board and majority of the outstanding capital stock or of the members of both the managing and managed corporations b. Majority of the quorum of the board and 2/3 of the outstanding capital stock of the managed corporation c. Majority vote of the board and majority of the outstanding capital stock or of the members d. 2/3 of the outstanding capital stock or of the members. 34. The corporate powers of a corporation shall be exercised by the stockholders. The entire consideration received by the corporation for its no-par value shares shall be treated as capital and shall not be available for distribution as dividends. a. True; True b. True; False c. False; False d. False; True 35. The stockholders or members mentioned in the articles of incorporation originally forming and composing the corporation and who are signatories thereof are called a. Incorporators b. Promoters c. Corporators d. Subscribers

36. Unless the by-laws provide otherwise, written notice of regular meetings shall be sent to all stockholders or record a. At least one day prior to the meeting b. At least two days prior to the meeting c. At least one week prior to the meeting d. At least two weeks prior to the meeting 37. Which of the following is true a. Delinquent stock can be voted b. Unpaid stock is necessary delinquent c. Delinquent stock cannot be sold at public auction d. Unpaid stocks are entitled to payment of cash dividend 38. A corporation is a citizen of a. The state of the country where its principal office is situated b. The state country where its principal business is situated c. The state or country where it is incorporated d. All of the above 39. The liability of the stockholders for the payment of corporate debts is limited to the value of the shares. The entire consideration received by the corporation for its no-par value share shall be treated as capital and shall not be available for distribution as dividends. a. True; True b. True; False c. False; False d. False; True 40. Stocks which has been issued by a corporation as fully paid up when in fact it is not, because it has been issued as bonus or otherwise, without any consideration at all, or for less than par, or for property, labor or services at an overvaluation. a. Watered stocks b. Over issued stocks c. Treasury stocks d. Redeemable stocks 41. Which of the following qualifications is necessary in order that one may be elected secretary of the corporation? a. He must be a citizen and a resident of the Philippines b. He must be a director of the corporation c. He must be a stockholders of the corporation d. He must be a secretary of any other corporation 42. Three of the following are similarities between a partnership and corporation. Which is not? a. The individuals composing both have little voice in the conduct of the business b. Both have juridical personality separate and distinct form that the individuals composing them c. Like a partnership, a corporation can act only through agents d. Both are organizations composed of an aggregate of individuals 43. The right given to stockholder to dissent and demand payment of the fair value of their shares is called a. Right of proxy b. Appraisal right c. Pre-emptive right d. Stock right

44. All of the close corporation’s issued shares shall be held of record by bot more than a. 10 persons b. 15 persons c. 20 persons d. None of the above

51. This class of shares are those issued for no consideration or inadequate consideration: a. Bonus shares b. Deferred shares or founders shares c. Over issued shares d. Watered shares

45. A bond which is payable to a particular individual whose name is entered on the books of the corporation as the registered owner is called a. Registered bond b. Coupon bond c. Convertible bond d. Guaranteed bond

52. The power to deny pre-emptive right as a corporate power is classified as an: a. Express power b. Incidental power c. Implied power d. Discretionary power

46. The authorized capital stock of a proposed corporation is 100,000 dividend 1,000 shares with a par value of 100 each. At least 25,000 or 250 shares was subscribed by 25 subscribers. To meet the minimum amount of subscription that must be paid a. It is enough that 25% of the total subscription is paid, regardless of the amount paid by each individual subscription b. Each and every subscriber must always pay 250 which is 25% of their individual subscription c. Seven of the subscribers paid 6,250 and the rest of the subscribers d. None of the above 47. The owners of share in stock corporation are called a. Incorporators b. Promoters c. Members d. Stockholders 48. The nationality of a corporation is determined by the law of its domicile or place of principal business. The test is known as: a. The control theory b. The full absorption theory c. The incorporation theory d. The management theory 49. This is unincorporated business organization created by an instrument by which property is to be held and managed by trustees for the benefit and profit of such person as may be or become the holders of transferable certificates evidencing the beneficial interests in the estate a. Business Trust b. Close Corporation c. Condominium Corporation d. Joint Stock Company 50. When preferred shares are issued by a corporation with a fixed annual interest on the face thereof, the effect is: a. The contract of subscription is between the corporation and the stockholder subsists b. The stockholder is a plain investor who may rise or fall with the financial success or failure of the corporation. c. The stockholder is a creditor of the corporation d. The shares of stock are negotiable instruments under the Negotiable Instruments Law

53. The power to invest corporate funds in another corporation or business or for any other purpose as a corporate power is classified as an: a. Express power b. Incidental power c. Implied power d. Discretionary power 54. The power of conducting commercial contracts (to increase the business) and sponsoring athletic contest for employees to keep them in good health or maintaining a hospital for the employees is an example of: a. Express power b. Incidental power c. Implied power d. Discretionary power 55. To establish pension, retirement, and other plans for the benefits of its directors, trustees, officers and employees is an example of: a. Express power b. Incidental power c. Implied power d. Discretionary power 56. A religious order is considered as a: a. Corporation by prescription b. Public corporation c. Corporation sole d. None of them. 57. Place of residence of a corporation shall be its: a. Place of incorporation b. Place of residence of majority of stockholders c. Place where the principal office is established d. None of them 58. This shall constitute a quorum for transaction of corporate business: a. Majority of the members b. Majority of the stockholders c. Majority of the directors d. All of them 59. Juridical personality of a corporation begins: a. From the date of issuance of certificate of incorporation b. By agreement of the parties c. Acknowledgement before a Notary Public d. None of them

60. Right which the existing stockholders of corporation cannot be deprived without the consent is their right to subscribe or to purchase new stock issued by the corporation; or unissued original stock, in proportion to their holdings before it can be offered to others: a. Right of redemption b. Pre-emptive right c. Right to purchase d. None of them 61. A private corporation organized under the corporation law commences to have corporate existence and juridical personality and is deemed incorporated from: a. The date when the articles of incorporation is signed by the incorporators b. When the articles of incorporation and by laws are presented and received by the Securities and Exchange Commission and the filing fee is paid c. From the date the SEC issues a certificate of incorporation under its official seal d. When the Articles of Incorporation is notarized by a Notary Public 62. The following are the qualifications of incorporators . Choose the exemption: a. Majority of whom must be Filipinos b. Majority of whom are residents of the Philippines c. All are of legal age d. Natural persons, not less than five but not more than 15. 63. These are the shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation: a. Redeemable shares b. Treasury shares c. Founder’s share d. None of the three 64. In the amendment of the Articles of Incorporation of a stock corporation, the following is necessary: a. Amendment by the majority vote of the Board of Directors plus a vote or written assent of the stockholders representing at least 2/3 of the outstanding capital stock. b. Amendment by a vote of 2/3 of the stockholders c. Amendment by the majority vote of the Board of Directors d. None of the three 65. Corporation governed by special laws, aside from the requirements specified under the corporation laws, in order that their articles of incorporation may be approved or accepted, must present before the Security and Exchange Commission: a. A favorable recommendation from the Ministry of Finance b. A copy of previous income tax return and a statement of assets, liabilities and net worth c. A favorable recommendation of the appropriate government agency to the effect that such articles or amendment is in accordance with law. d. An undertaking to change the name of the corporation if found that there is already registered with the SEC a name or a name similar to the name of this corporation

66. The following are some of the requisites of a de facto corporation. Choose the exception: a. Valid law under which it is incorporated b. Attempt to incorporate c. Assumption of corporation power d. None of the above 67. The following are the qualifications of director in a corporation. Choose the exemption: a. Majority of the directors must be Filipino citizens b. He must own at least one share of the stock in his name c. Majority of the corporate directors must be residents of the Philippines d. He must not have convicted by final judgment of an offense carrying an imprisonment exceeding 6 years or an offense constituting a violation of...