PARTNERSHIP

1. Partnership distinguished from a co-ownership.

a. May or may not exist for profits.
b. Has a separate and distinct juridical personality from the personalities of persons
composing it.
c. Created by voluntary agreement or by inheritance.
d. Rights are transmissible to heirs.
2. Which of the following is a characteristic of a partnership contract?
a. Formal
b. Innominate
c. Gratuitous
d. Preparatory
3. Which of the following is an essential element of a partnership?
a. There must be a contribution of money, property and industry to a common fund.
b. It must be an association for profit with the intention to profits among themselves.
c. There must be a valid and voluntary agreement.
d. All of them.
4. The receipt by a person of a share of the profits of a business is a prima facie evidence
that he is a partner in the business, but this presumption can be controversed by
evidence to the contrary as in the following instances, except:
a. As a debt by installments or otherwise.
b. As wages of an employee or rent to a landlord.
c. As an annuity to a widow or representative of a deceased partner.
d. As a share of the net profits of the business.
5. A partnership must have a lawful object or purpose and must be established for the
common benefit or interest of the partners. Which of the following instances is lawful?
a. A partnership formed to furnish apartment houses which would be used for
prostitution.
b. A partnership wherein the partners contributed all their present properties.
c. A partnership for illegal gambling purposes.
d. A partnership formed to create illegal monopolies or contributions in restraint of trade.
6. Type of partnership in which the partners enjoy practically all the profits.
a. General partnership
b. Universal partnership
c. Limited partnership
d. De facto partnership
7. Partnership which compromises all that the partners may acquire by their work or
industry during the existence of the partnership is:
a. Universal partnership of present property.
b. Universal partnership of profits.
c. Particular partnership
d. General partnership
8. May contribute money, property or industry to the common fund:
a. Limited partner
b. General partner
 c. Both limited and general
d. None of them

9. May be required additional contribution in case of imminent loss.

a. Capitalist partner
b. Limited partner
c. Industrial partner
d. none of the above
10. One who takes charge of the winding up of partnership affairs upon dissolution:
a. Silent partner
b. Liquidating partner
c. Ostensible partner
d. None of the above
11. Management of partnership is usually conferred upon the
a. Manager
b. President
c. Partners
d. None of the above
12. Sometimes termed as dormant partner
a. Limited partner
b. Capitalist partner
c. Secret partner
d. None of the above
13. One who takes active part in the business, but is not known to be a partner by outside
parties is:
a. Silent partner
b. Dormant partner
c. Nominal partner
d. Secret partner
14. Alcantara, Beranda and Castoria are partners of ABC and Company. If Daniela, a third
person, allows his name to be used in the firm name of the partnership as ABCD and
Company, then he becomes liable for being
a. Dormant partner
b. Secret partner
c. Silent partner
d. Nominal partner
15. Bears the risk of loss of things contributed to the partnership
a. Contributing partner
b. Limited partner
c. Partner contributing usufructory rights
d. All of the above
16. A limited partner who takes active part in the management of the firm becomes –
a. A managing partner
b. Liable as general partner
c. A general partner
d. A general and limited partner at the same time
17. Which of the following statements is correct?
a. To be valid, a partnership must be in writing.
b. A contract of partnership having a capital of P5,000 must be in a public instrument,
otherwise void.
c. Where there is contribution of immovable property, the partnership contract must be
duly notarized in order to be valid.
d. A contract of partnership having a capital of P3,000 which is not registered in the Sec
cannot sue but can be sued.
18. Every contract of partnership having a capital of P3,000 or more in money or property
shall appear in public instrument which must be recorded in the Securities and
Exchange Commission. Failure to comply with said requirements
a. Will not affect the liability of the partnership and the members thereof to third persons
b. Will render the partnership void
c. Will not give the partnership a legal personality
d. Will give the partnership a de facto existence
19. Ralph and Vi orally engaged to form a partnership. Each contributes cash and properties
worth P10,000 to a common fund. But they did not register the partnership with the SEC.
a. The partnership is still valid
b. The partnership is void
c. The partnership is voidable
d. The partnership is unenforceable
20. Which of the following persons are not disqualified in forming a universal partnership?
a. Those guilty of adultery or concubinage
b. Husband and Wife
c. Those guilty of the same criminal offense, if the partnership is entered into a
consideration of the same
d. Brother and sister
21. A, B and C formed a partnership with A and B as capitalist partners and C as industrial
partner. C engaged in a business for himself without the express consent of the capitalist
partners. Which of the following remedies is best for A and B?
a. Expel C from partnership
b. They may appropriate all the benefits which C may have obtained in his separate
business
c. Make C liable for damages
d. Expel C or appropriate all the benefits which C may have obtained in his separate
business, with damages in either case.
22. A limited partnership was formed in 1994 by X as general partner and Y and Z as limited
partners. In 1995, X and Y got married. Did the marriage dissolve or change the form of
the partnership?

1st Answer: Yes, partnership is dissolved by marriage because there is a change in

equity and status among the partners.
2nd Answer: No, because spouses can enter into a universal partnership.

a. Both answers are correct.

b. 1st answer is wrong, 2nd answer is correct.
c. Both answers are wrong.
 d. 1st answer is correct, 2nd answer is wrong.
23. Alterra and Bavada agreed on May 30, 2015 that they will contribute P20,000 each to
form a partnership for the purpose of engaging in the business of buying and selling
palay for a period of 3 years. They agreed to organize it on July 1, 2015 and start with
the operation on July 15, 2015. They registered it with SEC and the certificate of
registration was issued on July 30, 2015. When is the partnership formed?
a. May 30, 2015
b. July 1, 2015
c. July 15, 2015
d. July 30, 2015
24. The remedy of capitalist partners against an industrial partner who engaged in a
business for himself without the express permission from the partnership is:
a. To compel the industrial partner to sell his interest to the said capitalist partners.
b. To exclude him from sharing in the profits of the partnership.
c. To remove him as manager if he is appointed as manager of the partnership.
d. To expel him from the partnership and claim for damages.
25. A, B and C are general partners in ABC Partnership. D is debtor to the partnership in the
amount of P15,000. A received from the debtor D the sum of P15,000 and issued a
receipt collected to be P10,000.
a. A cannot be compelled to share the P5,000 with B and C.
b. B and C can change the capital of A with their share of the P5,000.
c. A can be compelled to share B and C their P5,000.
d. B and C should automatically sue D to collect the P10,000.
26. Property rights of a partner, except
a. To use specific partnership property for partnership purposes.
b. To share in the profits.
c. To participate in the management.
d. To exercise appraisal right.
27. A capitalist partner is engaged for his own account in an operation which is of the same
kind business in which the partnership is engaged. Said partner can be
a. Compelled to sell his interest in the partnership to the other capitalist partners.
b. Compelled to dissolve or discontinue the operation of his business.
c. Compelled to bring to the common funds of the partnership any profits accruing to him
from his transactions.
d. Denied his share in the profits of the partnership.
28. Statement 1: The name of the partnership may not include the name of one or more of
the partners.
Statement 2: The name of the partnership may include a name of a person and a partner
of the partnership.
a. True True
b. True False
c. False False
d. False True
29. Refers to persons who represent themselves or consent to another or others to
represent them to anyone that they are partners.
a. General partnership
 b. Limited partnership
c. Partnership by estoppel
d. None of the above.
30. A partner in a partnership who is not really a partner, not being a party to the partnership
agreement but made liable as a partner for the protection of innocent third persons is
known as
a. Secret partner
b. Dormant partner
c. Nominal partner or partner by estoppel
d. Answer not given.
31. Act 1: A managing partner renounced a partnership claim against the debtor.
Act 2: The partner is engaged in sale of merchandise, a partner included in the business
of the partnership the sale of “shabu.”
Which act requires consent of all partners?
Act 1 Act 2
a. Yes Yes
b. Yes No
c. No Yes
d. No No
32. Cause of dissolution which does not violate the agreement between the partners, except
a. Termination of the definite term or particular undertaking
b. Express will of any partner who must act in good faith
c. Expulsion of any partner
d. Contravention of partnership agreement
33. Which of the following may be a cause of involuntary dissolution
a. Express will of any partner
b. Insolvency of any partner
c. Termination of the terms
d. Expulsion of any partner
34. Which of the following is not included in winding up or liquidation of a partnership?
a. Payment of all partnership liabilities to third party creditors and partner/creditor.
b. Officially ceases operation and bows out of existence.
c. Return of partners’ contributions
d. Distribution of net assets among the partners
35. Which of the following is not included in the winding up of partnership?
a. Consolidation of the partnership assets and receivables
b. Payment of all partnership liabilities
c. Return of partners’ respective contributions
d. Distribution of profits
36. Does not cause partnership dissolution
a. Partners’ contribution which becomes a property of the partnership assets
b. Death of one partner
c. Insolvency of any partner
d. Irrevocable withdrawal of partners from the partnership without justifiable reason.
37. The partnership is insolvent. They are preferred as regards to the partnership property.
a. Partnership creditors
b. Partners’ separate creditors
c. Partners with respect to their capital
d. Partners with respect to their profits
38. The change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on of the partnership
a. Realization
b. Winding-up
c. Dissolution
d. Termination
39. This involves the process of liquidating partnership business after dissolution
a. Dissolution
b. Winding up
c. Termination
d. Consolidation
40. Abrera, Belleza and Corporal, partners, while on their way home from a seminar, had a
car accident. Abrera and Belleza died on the spot, while Corporal was hospitalized but
died two days later. Who may wind up the partnership affairs?
a. None.
b. Any of the heirs of the three partners
c. Legal representatives of the heirs of each partner
d. Legal representative of Corporal.
41. If a partner is insolvent, the first order of preference in the distribution of his assets is
a. Partner contribution to the partnership
b. Partnership creditor
c. Separate creditor of the debtor
d. Pro-rata between the separate creditors and the partnership creditors
42. This is the order of preference in the liquidation of a general partnership
a. Outside creditors, Partners as creditors, Partners’ capital, Partners’ profits
b. Partners as creditors, Outside creditors, Partners’ capital, Partners’ profits
c. Partners’ capital, Outside creditors, Partners as creditors, Partners’ profits
d. Outside creditors, Partners’ creditors, Partners’ profits and Partners as creditors
43. Which of the following liabilities of the partnership shall rank first in the order of
payment?
a. Those owing to creditors other than partners.
b. Those owing to partners in respect to profits
c. Those owing to partners in respect to capital
d. Those owing to partners other than for capital and profits
44. Has priority over partnership assets
a. Debtors
b. Creditors
c. Partners
d. All of them
45. X, Y and Z are partners and contributed to the partnership P40,000, P30,000 and
services respectively. The partnership was later liquidated and after payment of the
 partnership indebtedness, only P20,000 worth of assets remained. How much is the
share of Z?
a. Zero
b. Equal to the share of x
c. Equal to the share of y
d. P6,000
46. X, Y and Z are partners. X contributed his service only; Y P40,000 and Z, P20,000. The
partnership was liquidated. After payment of the partnership obligations, only P18,000
worth of assets remained. How much will be the share of X?
a. Equal to the share of Z
b. P6,000
c. Zero
d. Equal to the share of Y
47. X, Y and Z are in partnership business. X contributed P10,000, Y contributed P5,000
and Z his services only. After payment of the partnership debts, what remains of the
partnership assets is P6,000 only. In the absence of the terms to the contrary, the share
of Z will be equal to
a. That of Y
b. P2,000
c. That of Y
d. Nothing
48. A limited partner is not liable as a general partner. Which is not an exception?
a. His name appears on the partnership name
b. In addition to the exercise of his rights and powers as a limited partner, he takes part
in the control of the business
c. When he is also a general partner
d. The surname which appears in the partnership name is also the surname of a general
partner.
49. Which of the following acts will make a limited partner liable as a general partner?
a. Mere dealing with a customer
b. Mere consultant on one occasion with the general partners
c. Supervision over a superintendent of the business of the firm
d. All of the above
50. NO 1: A substituted limited partner has the right to inquire any information or account of
the partnership transactions and to inspect the partnership books.
NO 2: A substituted limited partner shall be subject to all restrictions and liabilities of the
assigning limited partner.
a. True, False
b. False, True
c. True, True
d. False, False

CORPORATION

1. A corporation where vacancies in the Board of Directors are filled only by the remaining
member of the Board is
 a. Open corporation
b. Close corporation
c. Corporation sole
d. Quasi-public

2. How many numbers of votes of the BODs are required to change the name of a
corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board

3. One of the following does not require stockholder’s approval

a. Merger or consolidation
b. Change of corporate name
c. Investments of corporate funds for a purpose outside of the main purpose of the
corporation
d. Declaration of cash dividend

4. A corporate doctrine which states that the stockholders are not personally liable for
corporate debts
a. Trust fund doctrine
b. Separate legal entity
c. Right of succession
d. Piercing the veil of corporate fiction

5. Articles of incorporation and organization of private corporations must be registered with

a. DTI
b. PSE
c. SEC
d. NSO

6. Cash dividend as distinguished from stock dividend

a. It does not involve any disbursement
b. It is still part of the corporate asset
c. It increases legal capital
d. It is declared by the Board of Directors

7. The voting requirements for delegating power to adopt, amend or repeal the by-laws in
favor of the board of directors is:
a. 2/3 vote of the outstanding shares
b. Majority of the vote of the directors plus the vote of a majority of the outstanding
shares
c. Majority vote of the director plus the vote of 2/3 of the outstanding shares
d. 2/3 of the vote of the directors

8. Who may be removed as a director without cause during their term of service?
a. A director representing the majority stockholders.
b. A director representing the minority stockholders.
c. Either (a) or (b)
 d. Neither (a) nor (b) because they can only be replaced upon the expiration of their
term of office though the election of another in their place since the removal is
without cause

9. These statements are presented to you:

I. The members of board of directors of a corporation may provide for themselves
compensation other than per diems.
II. A director who receives compensation as such may also be given separate
compensation if the serves the corporation in another capacity like the president
who is required to be a director.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.

10. The power to invest corporate funds in another corporation or business or for any other
purpose as a corporate power is classified as a (an)
a. Express power
b. Incidental power
c. Implied power
d. Discretionary power

11. Three of the following are attributes of a corporation. Which is not?

a. Created by agreement of the incorporators
b. An artificial being
c. Has a right of succession
d. Has powers, attributes and property expressly authorized by law or incident to its
existence.

12. S and ABC Corporation entered into a “Deed of Sale of Shares of Stock” for the
acquisition by S of 1,000 of the unissued shares of the latter at P100.00 par value per
share. S was to give a down payment of 50% with the balance to be paid after 30 days.
What kind of contract was entered into between S and ABC Corporation?
a. Contract of sale
b. Contract of purchase
c. Contract of subscription
d. Some other contract.

13. The nationality of the corporation is determined by the place of the controlling
stockholders. This test is
a. Controlling test
b. Domicile test
c. Incorporation test
d. Management test

14. The following are acts within the implied powers of a corporation except
a. Acts is the usual course of business
b. Acts to protect debts owing to the corporation
c. Embarking in different businesses in which it is not a part of the regular business
 d. Acts to increase its business

15. The Meralco, Bayantel, Cebu Pacific Air, and Victory Liner are
a. Quasi-public corporation
b. Tramp corporation
c. Quasi corporation
d. Public corporation
16. For the past three years, XYZ Corporation has been earning tremendously in excess of
100% of the corporation’s paid in capital. All of the stockholders’ have been claiming that
they share in the profits of the corporation by way of dividends but the board of directors
failed to lift its finger. Is the corporation obliged to declare dividends?
a. No, because the corporation can retain surplus profits in excess of 100% of its
paid-up capital
b. Yes, because a corporation cannot retain surplus profits in excess of 100% of its
paid-up capital always.
c. Yes, because a corporation as a rule cannot retain surplus profits in excess of
100% of its paid-in capital.
d. No, because it is a management prerogative of the board of directors whether or
not it will declare dividends.

17. Which of these conditions comply with the minimum requirement of law to corporate
formation?
Authorize Subscribed Paid-up
d Capital Capital Capital
a. 200,000 10,000 10,000
b. 64,000 16,000 5,000
c. 100,000 25,000 12,500
d. 200,000 50,000 10,000

18. For the purpose of determining the validity of the contract entered into between two
corporations with interlocking directors whose interest in one corporation is nominal and
substantial in the other, the presence of the interlocking director should not be necessary
to constitute a quorum and his vote should not be necessary for the approval of the
contract in the meeting of board of directors:
a. Of the corporation where his interest is substantial.
b. Of the corporation where his interest is merely nominal.
c. Of both corporations.
d. Of neither corporation for as long as there is no fraud and the contract is fair and
reasonable under the circumstances because he has a personality separate and
distinct from both corporations.
19. Shares that may be issued at a price higher than P5.00 per share are:
a. Par value shares.
b. No-par value shares.
c. Both (a) and (b).
d. Neither (a) nor (b).
20. Director Angela is instrumental in making a contract on behalf of Dana Corporation of
whose board she is a member, with Bea Corporation of which she has a larger interest
a. Corporate opportunity
b. Limited capacity
c. Interlocking directorate
d. Business judgment rule

21. A stock that is issued without consideration or below par value or the issued price is
known as:
a. Watered stock
b. Delinquent stock
c. Redeemable stock
d. Preferred stock

22. These statements are presented to you:

I. A director is an agent of the corporation by virtue of his being elected as a
director.
II. A director who owns the controlling interest in a corporation has only one vote in
the meeting of board of directors.
In your evaluation of the following statements.
a. Both statements are true.
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.

23. Amendment of the articles of incorporation requires

Vote of Directors Vote of stockholders
a. Majority 2/3 of outstanding capital stock
b. Majority of quorum 2/3 of outstanding capital stock
c. Two-thirds Majority of outstanding capital stock
d. Majority Majority of quorum

24. Which of these purpose can be combined in just one corporation?

a. Bank and trust purposes
b. Educational and insurance purposes
c. Railroad and bank purposes
d. Insurance and railroad purpose

25. These statements are presented to you:

I. A person may become a stockholder of a corporation through the receipt of a
stock dividend given to him in payment of services previously rendered.
II. A contract of subscription has for its object unissued or issued shares such as
treasury shares.
In your evaluation of the following statements.
a. Both statements are true.
b. Both statements are false.
 c. Only Statement I is true.
d. Only Statement II is true.

26. Which of the following may be held outside the Philippines?

I. Board of Directors meetings
II. Members meeting of a non stock corporation
III. Stockholders meeting of a corporation going to public

a. I only
b. I and II
c. II and III
d. I, II, and III

27. Which of the following documents may be submitted before or after incorporation?
a. Verification certificate as to the name of the corporation.
b. By-laws
c. Certificate of bank deposit as to the paid-up capital.
d. Articles of incorporation

28. Which of the following conditions will allow corporation formation and SEC registration?
Authorized Subscribed Paid-up
Capital Stock Capital Stock Capital
a. 90,000 12,500 3,125

b. 60,000 15,000 6,000

c. 120,000 25,000 5,000

d. 100,000 20,000 5,000

29. Samorano is the owner of 500 shares of stock of Center Sales Corporation whose
articles of incorporation provide for 5 directors. In the annual election of directors, the
following ran for the position of director: Abanes, Baricuatro, Castillo, Doromal, Elmora,
and Filamor. Samorano asks you which of the following is the incorrect way of casting
his votes.
a. 500 votes each for each candidates.
b. 500 votes each for Abanes, Baricuatro, Castillo, Doromal and Elmora.
c. 2,500 votes for Abanes.
d. 1,000 votes for Abanes, 1,000 votes for Baricuatro, and 500 votes for Castillo.

30. Which of the following is not required to be included in the Articles of Incorporation?
a. Duties of the president
b. Name of the corporation
c. Period of existence
d. Location of the principal office

31. The article of incorporation of an Eastex Computer Corporation provide for 15

directors. Which of the following is invalid concerning its by-laws?
a. That the quorum in the meetings of directors be at least 8 directors
 b. That the quorum in the meetings of directors be at least 10 directors.
c. That the quorum in the meetings of directors be at least 7 directors.
d. The by-laws do not mention anything about the quorum in the meetings of
directors.

32. Which of the following expresses the minimum capital formation of a corporation?
Authorized
Subscribed Paid-up
Capital Stock
a. 100,000 20,000 5,000

b. 100,000 25,000 5,250

c. 60,000 15,000 4,000

d. 50,000 10,000 2,000

33. The following positions in a corporation are presented to you:

I. President
II. Treasurer
III. Corporate Secretary
IV. Chairman of the Board
Who of the foregoing must be a director of the corporation at the same time?
a. I and II
b. III and IV
c. I and III
d. I and IV

34. The certificate of incorporation of Parametro Corporation was issued by the Securities
and Exchange Commission despite the fact that only 3 out of its 7 incorporators were
residents of the Philippines. Such inadvertent issuance of the certificate of
incorporation:
a. Means Parametro Corporation is unincorporated.
b. Means Parametro Corporation a de facto incorporation.
c. Does not affect the acquisition by Parametro Corporation of the status of a de
jure corporation because non-compliance of the residence requirement is a minor
defect that does not affect corporate existence.
d. Results in the automatic dissolution of the Parametro Corporation upon discovery
by SEC of the corporations failure to comply with the residence requirement for
incorporators.

35. An officer of a corporation may hold two or more positions in the corporation but not as
a. Chairman of the Board and President
b. President and treasurer
c. Secretary and Treasurer
d. Vice-president and Secretary
36. Cannot be the secretary of the corporation
a. President
b. Secretary
c. Incorporator
d. Treasurer

37. Which of the following is true?

a. Delinquent stock can be voted
b. Unpaid stock is necessarily delinquent
c. Delinquent stock cannot be sold at public auction
d. Unpaid stocks are entitled to payment of cash dividend
38. Which of the following qualifications is necessary in order that one may be elected
president of the corporation?
a. He must be a citizen and resident of the Philippines
b. He must not be a stockholder or director of a competitor corporation
c. He must not be a president of any other corporation
d. He must be a director of the corporation

39. A corporation operating under the color of law

a. Void corporation
b. Voidable corporation
c. De jure corporation
d. De facto corporation
40. Which of the following is not a qualification of directors of a stock corporation?
a. Each director must be the owner of at least 1 share of stock.
b. Such shares of stock must stand in their name in the books of the corporation during
their term as directors.
c. Majority of the directors must be citizens of the Philippines.
d. The number of directors should not be less than 5 nor more than 15.

41. This shares can be acquired by the corporation even without unrestricted earnings
a. Founder’s shares
b. Redeemable shares
c. Par value share
d. No par value share

42. This group of persons may not be the incorporators of a corporation in the Philippines
a. 15 Chines who are residents of Naga City
b. 5 non-resident aliens and 10 resident aliens
c. 10 Japanese residing in the Philippines and 5 Filipinos residing in Japan
d. 15 Filipinos who are resident of Korea

43. A director of two or more corporations

a. A non-voting director
b. An intermediary director
c. An inter-locking director
d. A void director

44. A distribution by a corporation of shares of stock held by it in another corporation is a

a. Situation equivalent to a sale of assets
 b. Situation equivalent to a merger or consolidation
c. Stock dividends
d. Property dividend or an actual distribution of corporate assets

45. I. Pre-emptive right does not apply to shares issued in compliance with laws requiring
stock offering or minimum stock ownership by the public.
II. A corporation can deny the exercise of a stockholder of his pre-emptive right.
a. True, True
b. True, False
c. False, True
d. False, False

46. These do not form part of the outstanding capital stock

a. Bonus shares
b. Treasury shares
c. Founders’ shares
d. Redeemable shares
47. Which of the following would result to the automatic dissolution of a corporation?
a. Continuous inoperation for a period of at least 5 years.
b. Failure to formally organize and commence the transaction of its business or the
construction of its works within 2 years from its incorporation.
c. Failure to adopt by-laws and submit the same to the SEC within 30 days from the
receipt of the official notice of the issuance of its certificate of incorporation.
d. Commission by the corporation of an ultra-vires act.

48. A director of two or more corporations

a. Non-voting director
b. Intermediary director
c. Interlocking director
d. Void director

49. Corporate act: To disapprove a particular project

Number of directors: 11
Directors present: 8

What is the required number of votes to constitute a valid corporate act?

a. 4
b. 5
c. 6
d. 7

50. In a meeting to elect officers only 9 out of 11 members of the board attended. How many
votes will be needed to elect the President of the Corporation?
a. 8
b. 7
c. 6
d. 5