QUIZ1
QUIZ1
QUIZ1
SHADE "A"
FOR TRUE, SHADE "B" FOR
FALSE.
1. All incorporators are shareholders but not all
shareholders are incorporators.
2. A Corporation, like a partnership may be formed by
mere agreement.
3. The authorized shares represent the maximum number of
shares that a Corporation may issue.
4. When share capital is issued for consideration in the form of property other than
cash, the net book value of the property is used to record the transaction.
5. The owners of a stock corporation are called shareholders; the
owners of non-stock corporation are called members.
6. When the journal entry method is used the account Share capital
is credited upon issuance of stocks.
7. Under the memorandum entry method, the amount of share capital issued is
determined by deducting the balance of unissued share capital account from the
balance of authorized share capital account.
8. A stock certificate is issued to the subscriber upon the full
payment of the subscription.
9. Additional paid-in capital for the excess of the stock subscription price over
par or stated value is recorded at the time of subscription.
10. A corporation issued share capital on a subscription basis that is payable in
three installments. Each time the corporation receives a payment, Share capital
account is credited.
11. The liability of the shareholders for corporate debts is
limited to the amount of their investment.
12. A corporation is a business
owned by its shareholders.
13. Generally, there are only two classes of authorized share capital, the
preference share capital and the ordinary share capital.
14. Total issued shares less treasury shares is equal to
outstanding shares.
15. When subscribed shares are declared delinquent, receivable is
reclassed to the account "receivable from the highest bidder"
MULTIPLE CHOICE. SHADE THE LETTER
OF THE CORRECT ANSWER
16. Which of the following be considered
characteristic/s of a corporation?
a. Separate legal c. Rights of
entity succession
b. Limited liability of d. All of the
shareholders choices
17. A Cash asset received in exchange for
share capital is recorded at
c. Higher between fair
a. Face value market value or book value
b. Fair market
value d. Book value
18. The issuance of ordinary share
capital to shareholders
a. increases ordinary share c.increases ordinary share
capital authorized capital outstanding
b. decreases ordinary share d. decreases ordinary
capital authorized share capital outstanding
19. Advantages of a
Corporation incudes
a. Continuous c. Weak credit
existence capacity
b. Subject to rigid d. All of the
government control above
20. Process of organizing a
Corporation includes
c. Commencement of
a. Promotion the business
d. All of the
b. Incorporation above
21. Cream Corporation was organized on January 1, 2010 with authorized capital
of P2,000,000 consisting of 100,000 ordinary shares, P20 par value. Subsequently,
incorporators subscribed for 25,000 shares at P24. How much must be paid up
upon subscription to comply with the requirement of Securities and Exchange
Commission (SEC)?
c.
a. P600,000 P500,000
d.
b. P125,000 P150,000
22. Beige Co. was authorized to issue 10,000 preference shares, P100 par value
and 200,000 no-par ordinary shares. Subscriptions for 4,000 preference shares
was received at P110 with a downpayment of 25%. What entry should be made in
the books of Beige Co. to record the receipt of subscription?
a. Preference Share Capital 440,00
Subscription Receivable 0
Preference
Share Capital 400,0
Subscribed 00
Prefere
nce
Share
Premiu 40,00
m 0
b. Preference Share Capital 440,00
Subscription Receivable 0
Preference
Share Capital 440,0
Subscribed 00
c. Cash 110,00
0
Preference Share
Capital Subscription 110,0
Receivable 00
d. Preference Share 400,00
Capital Subscribed 0
Prefere
nce
Share 400,0
Capital 00
23. Last September 6, 2010, Brown Co. issued 2,000 shares of its P10 par value
ordinary share capital in exchange for a piece of land to be held for a future plant
site. Brown Co.'s ordinary share capital was listed and traded at P28 per share on
the same date. The land has no known market value. How much is the increases
in Shareholder's equity resulting from this exchange?
c.
a. P0 P56,000
d.
b. P20,000 P34,000
Jan. 10 Issued 25,000 shares at
P22 per share
Mar.25 Issued 1,000 shares for legal service when the
fair value was P24 per share
Sept.30 Issued 5,000 shares for a piece of equipment when
the value was P26 per share.
24. How much is the balance of the ordinary share capital
account as of September 30?
c.
a. P620,000 P700,000
d.
b. P674,000 P704,000
25. Using the information above, what amount should be
reported as additional paid-in capital?
c.
a. P50,000 P64,000
d.
b. 54,000 P84,000
For items 26-27
Aqua Corp. was incorporated on June 1, 2010 with an authorized 250,000 share of
no-par ordinary share capital, stated value of P15 and 10,000 shares of 10%
preference share capital, par value P50. Transactions affecting company's share
capital as of June 30,2010 were as follows:
June 1 Issued 50,000 ordinary
shares for cash at P15 per share.
June 5 Issued 50,000 ordinary shares in exchange for assets
with total market value of P900,000.
June 15 Received subscriptions for 100,000 ordinary share at
P30 and for 5,000 preference shares at P55.
June 25 Received full payment for subscriptions received on June
15 and the corresponding stock were issued.
26. What is the total paid in capital in excess of par and stated
value for both ordinary and preference shares?
c.P1,650,
a. P25,000 000
d.P1,675,
b. P300,000 000
27. Using the information above, how much is the total
Shareholder's equity?
c.P4,675,
a. P3,250,000 000
d.P4,925,
b. P4,500,000 000
Issued Preference P230,0
share, P100 par value 00
Unissued preference shares,
P100 par value 50,000
Preference share
premium 80,500
Authorized Ordinary share, P15 1,000,0
par value 00
Unissued Ordinary 525,00
share, P15 par value 0
Ordinary share 275,00
premium 0
Ordinary share 50,000
subscribed
Retained 190,00
earnings 0
Notes payable 400,00
0
Subscription receivable - 40,000
ordinary (Current)
Revaluation 50,000
surplus
28. How much is the contributed
capital of the Corporation?
a. P715,000 c. P755,000
b. P980,000 d. P705,000
29. How much is the additional paid-in capital
of the Corporation?
a. P275,000 c. P355,500
b. P80,500 d. P345,500
30. How much is the total Shareholder's equity
of the Corporation?
a. P1,340,500 c.
P1,110,500
b. P1,350,500 d.
P1,740,500
a. P490,000 c. P250,000
b. P340,000 d. P90,000
32. How much is the total Ordinary share capital after
the foregoing transactions?
a. P1,750,000 c. P1,625,000
d.
b. P1,875,000 None
33. How much is the total Ordinary share capital subscribed
after the foregoing transactions?
a. P1,250,000 c. P2,000,000
b. P375,000 d. P2,340,000
34. How much should be presented as part of
subscription receivable?
a. P2,340,000 c. P95,000
b. P1,500,000 d. P382,000
KEY ANSWER:
1. T 33. B
2. F 34. 292,000
3. T
4. F
5. T
6. F
7. F
8. T
9. T
10. F
11. T
12. T
13. T
14. T
15. T
16. D
17. A
18. C
19. A
20. D
21. D
22. A
23. C
24. A
25. D
26. D
27. D
28. 1,110,500
29. C
30. A
31. A
32. B