Question 1

1 / 1 pts
Ordinary share capital is usually called the risk stock in that it is the first to shoulder the losses
but benefits the most in case there is big profit. It represents the residual ownership interest in
the corporation.
Both statements are false.
The first statement is false, the second statement is true.
Correct!
Both statements are true.
The first statement is true, the second statement is false.
Question 2
1 / 1 pts
The number of shares that a corporation’s incorporation documents allows it to sell is referred
to as ____________.
outstanding stock
issued stock
Correct!
authorized stock
common stock
Question 3
1 / 1 pts
A corporation organized for business or profit.
Eleemosynary corporation
Non- stock corporation
Ecclesiastical corporation
Correct!
Civil corporation
Question 4
1 / 1 pts
The following are the advantages of a corporation except.
The ownership of shares of stocks can be transferred without the consent of the other
shareholders.
Financing is easier to obtain
Correct!
The corporation is subject to greater degree of governmental control
The corporation has a continuous existence
Question 5
1 / 1 pts
The cumulative preference shareholders are entitled to receive the current year dividends and
the dividends in arrears. - The preference shareholders are entitled to receive dividends after
the ordinary shareholders had received their dividends.
Both statements are false.
Correct!
The first statement is true, the second statement is false.
Both statements are true.
The first statement is false, the second statement is true.

Question 6
1 / 1 pts
The maximum number of shares a corporation may issue.
Contributed capital
Legal capital
Paid-up capital
Correct!
Share capital
Question 7
1 / 1 pts
The shareholders or members mentioned in the Articles of Incorporation originally forming and
composing the corporation and who are signatories thereof are called _____________.
members
shareholders
Correct!
incorporators
promoters
Question 8
1 / 1 pts
Share capital represents:
Correct!
The amount invested in the business by stockholders when shares of stock were initially issued
by a corporation.
The owners' equity for a business organized as a corporation.
The price paid by the current owners to acquire shares of stock in the corporation, regardless
of whether they bought the shares directly from the corporation or from another stockholder.
The owners' equity accumulated through profitable operations that have not been paid out as
dividends.
Question 9
1 / 1 pts
The corporation whose ownership is widely held by many investors
Parent Corporation
Public Corporation
Correct!
Open Corporation
Subsidiary Corporation
Question 10
1 / 1 pts
Your friend is considering incorporating and asks for advice. Which of the following is not a
major concern?
number of shares of stock to authorize
number of incorporators
selection of the corporation name
Correct!
colors for the logo
Question 11
1 / 1 pts
XYZ Corporation issues shares of stocks and distributes dividends to shareholders. XYZ
Corporation is a/an
Ecclesiastical corporation
Eleemosynary corporation
Correct!
Stock corporation
Non- stock corporation
Question 12
1 / 1 pts
Which statement is true?
The par value of a share could not be less than P5.
Correct!
It is legal to return the amount of share capital during the lifetime of the corporation for a
wasting asset corporation.
Wasting assets corporation should pay dividends up to the balance of the retained earnings
The total consideration received for a par value share represents the legal capital
Question 13
1 / 1 pts
Which of the following is not the characteristic of a corporation?
Perpetual existence
Transferability of ownership.
Correct!
Unlimited liability
Separate legal entity

Question 14
1 / 1 pts
Issued stock is defined as stock that ________.
that is held by the corporation
Correct!
has been sold to investors
has no voting rights
is available for sale
Question 15
1 / 1 pts
Authorized capital stock or authorized share capital is synonymous with share capital. . It is
used under the memorandum method of accounting for the authorization of share capital.
Correct!
The first statement is true, the second statement is false.
Both statements are false.
Both statements are true.
The first statement is false, the second statement is true.
Question 16
1 / 1 pts
Preference shares that can be redeemed at a specified price at the option of the corporation.
Cumulative preference share
Participating preference share
Correct!
Callable preference share
Convertible preference share
Question 17
1 / 1 pts
A corporation issued 100 shares of $100 par value preference shares for $150 per share. The
resulting journal entry would include which of the following?
a credit to ordinary share capital
Correct!
a debit to cash
a credit to cash
a debit to share premium - preference share
Question 18
1 / 1 pts
The need to expand business operations brought about by the industrial revolution required
increasingly large amounts of money. The inadequacy of both the sole proprietorship and
partnership to raise the needed large amount of capital resulted to the development of the
corporate form of organization.
The first statement is false, the second statement is true.
Correct!
Both statements are true.
Both statements are false.
The first statement is true, the second statement is false.
Question 19
1 / 1 pts
A shareholder has no right to
sue the corporation
vote at shareholders’ meeting
inspect the books of the corporation
Correct!
issue new shares
Question 20
1 / 1 pts
It refers to an equitable right of shareholders to subscribe to newly issued shares of the
corporation in proportion to their present shares in order to maintain their equity in their
surplus as well as proportionate standing in the corporation.
right of redemption
concept of corporate entity
Correct!
pre-emptive right
right to be sued

Question 21
1 / 1 pts
It has the supreme authority in matters of management of the regular and business affairs of a
corporation.
minority shareholders
none of the given answers
majority shareholders
Correct!
board of directors

Question 22
1 / 1 pts
Which of the following is not a characteristic that sets preference share capital apart from
ordinary share capital stock?
ownership
Correct!
voting rights
dividend payments
transferability
Question 23
1 / 1 pts
The shares which have been issued by the corporation as fully paid and later reacquired by the
corporation.
Escrow shares
Correct!
Treasury shares
Founder’s shares of stock
Promotion shares
Question 24
1 / 1 pts
Corporation has the advantage of efficiency and flexibility in its management because of its
ability to hire the best in managerial talent. Its management is centralized in the stockholders.
Both statements are false.
Correct!
The first statement is true, the second statement is false.
The first statement is false, the second statement is true.
Both statements are true.

Question 25
1 / 1 pts
The par value of an ordinary share is equal to–
the amount at which the share is currently trading in an organized market
the amount received by the corporation when the share was originally issued
the book value of the ordinary share
Correct!
a designated peso amount per share established in the articles of incorporation

Question 26
1 / 1 pts
Par value of a stock refers to the ________.
maximum selling price of a stock
issue price of a stock
Correct!
value assigned by the incorporation documents
dividend to be paid by the corporation
Question 27
1 / 1 pts
Incorporation is the process of formalizing the organization of the corporation. It includes,
except -
Correct!
Issuance of stock dividends to shareholders.
Issuance by the SEC of the certificate of incorporation
Payment of the filing and publication fees.
Filing of Articles of Incorporation
Question 28
The portion of the authorized share capital that has been subscribed but not fully paid:
Share capital
 Subscribed share capital
Subscription receivable
Revaluation surplus

Question 29
1 / 1 pts
They are the rules of actions adopted by the corporation for its internal government and for the
government of its officers and of its stockholders or members
Articles of Incorporation
Correct!
By-laws
Stock and transfer book
Minutes books

Question 30
1 / 1 pts
The total amount of cash and other assets received by a corporation from the stockholders in
exchange for the shares is ________.
always below its stated value
Correct!
referred to as paid-in capital
referred to as retained earnings
always equal to par value

Question 31
1 / 1 pts
Memorandum entry method recognizes the account preference or ordinary share capital upon
issuance of the shares for cash only.
True
Correct!
False
Question 32
1 / 1 pts
Shares may be issued for tangible or intangible properties.
Correct!
True
False
Question 33
0 / 1 pts
For subscribed shares, share premium account is recognized upon fall payment of subscription.
You Answered
True
Correct Answer
False
Question 34
1 / 1 pts
Shares issued for services rendered are recorded at the value of shares issued.
True
Correct!
False

Question 35
1 / 1 pts
Shares of stocks of any corporation are traded in the stock exchanges.
Correct!
True
False

Question 36
1 / 1 pts
Share certificates may be issued to shareholders upon full payment.
Correct!
True
False

Question 37
1 / 1 pts
If the fair value of the property is not available, the transaction may be recorded using the fair
market value of the share issued.
Correct!
True
False

Question 38
1 / 1 pts
The corporation may purchase delinquent shares.
Correct!
True
False

Question 39
1 / 1 pts
A corporation is dissolved when a majority shareholder sold all his shares of stocks.
True
Correct!
False
Question 40
1 / 1 pts
In a business organized as a corporation, it is not necessary to list the equity of each
stockholder on the statement of financial position.Correct!
True
False
Question 41
1 / 1 pts
A business entity is regarded as separate from the personal activities of its owners whether it is
a sole proprietorship, a partnership, or a corporation.
Correct!
True
False

Question 42
1 / 1 pts
Subscribed share capital has a normal credit balance.
Correct!
 True
False

Question 43
1 / 1 pts
Limited liability means that owners of a business are only liable for the debts of the business up
to the amounts they can afford.
True
Correct!
False
Question 44
1 / 1 pts
The New Code states that at least 25% of the subscribed share capital should be paid by the
shareholders.
True
Correct!
False
Question 45
1 / 1 pts
The shareholders have the right to adopt and amend by-laws.
Correct!
True
False
Question 46
1 / 1 pts
Transfer of ownership or share of stocks can be easily transacted as long as there is consent of
the all other shareholders.
True
Correct!
False
Question 47
1 / 1 pts
The stockholders of a close corporation should be at least 20 persons.
True False
Question 48
1 / 1 pts
If shares are issued at more than par, share capital is credited equal to its par and the share
premium is credited for the excess.
True False
Question 49
1 / 1 pts
Unissued share capital account is used under the memorandum entry method of accounting for
authorized share capital.
True False

Question 50
1 / 1 pts
The highest bidder is willing to pay the offer price of the delinquent shares for the highest
number of shares.

True False
Quiz 5B
Question 1
3 / 3 pts
B Corporation issued 10,000 ordinary shares, par value P 10 in exchange for equipment. At the
date of exchange, stocks are selling at P 15 and no market value is known for the equipment.
The journal entry include which of the following?
 credit to ordinary share capital P150,000
debit to ordinary share P100,000.
debit equipment P100,000
Correct!
debit to equipment P150,000

Question 2
3 / 3 pts
GM, Inc. outstanding bonds payable.

Bonds payable P3,800,000

Accrued interest payable 80,000

The company issued 150,000 ordinary share capital P20.00 par with a fair value of P25 per
share the full settlement of the bonds payable and the accrued interest. The journal entry
usingmemorandum method would include the following, except?
Correct!
Debit Gain on Extinguishment of Debt P130,000
Credit Ordinary Share Capital P3,000,000
Credit Share Premium P 750,000
Debit Bonds Payable P3,800,000

Question 3
3 / 3 pts
Sky Corporation issued 10,000 shares of ordinary share capital, par value P20 in exchange for a
Land P218,000 fair value. At the date of the exchange, the shares are selling at P25,. How will
the exchange be recorded in the books of Sky Corporation?
Debit Land P218,000; Debit Discount on Land P32,000; Credit Ordinary share capital
P250,000.
Debit Land P200,000; Credit Ordinary share capital P200,000.
Correct!
Debit Land P218,000; Credit Ordinary share capital P200,000; Credit Share Premium P18,000
Debit Land P250,000; Credit Ordinary share capital P200,000; Credit Share Premium P50,000

Question 4
3 / 3 pts
The shareholders’ equity of GM Corporation includes the following:

Preference share capital, P 100 par 5,000,000

Share premium - preference 500,000

Ordinary share capital, P 25 par 10,000,000

Share premium - ordinary 550,000

Retained earnings 2,000,000

Subscribed ordinary share capital 300,000

Subscription receivable - ordinary 200,000

The average selling price of ordinary share capital will be______________.

P25.00
P25.85
P26.86
Correct!
A.P26.33

Question 5
0 / 3 pts
Wise Corporation. was authorized to issue 100,000 shares of P 10 par value preference shares
and 100,000 P 10 par value ordinary shares. A total of 50,000 ordinary shares were subscribed
at par, 30% down payment was received. Fifty percent of preference shares were subscribed at
P20 and 25% of which were paid.. How much is the legal capital ?
P400,000
Correct Answer
P1,000,000
You Answered
P1,500,000
P2,000,000

Question 6
3 / 3 pts
The shareholders’ equity of JXN Corporation includes the following:
Preference share capital, P 100 par P 5,000,000
Share premium - preference 500,000
Subscribed preference share capital 1,000,000
Ordinary share capital, P25 par 10,000,000
Share premium 550,000
Notes payable 1,000,000
Retained earnings 2,000,000
Subscribed ordinary share capital 300,000
Subscription receivable - ordinary 200,000
How much is the legal capital?
Correct!
P 16,300,000
P 15,000,000
P 17,350,000
P 16,100,000

Question 7
3 / 3 pts
On January 12, 2021, Blue Corporation issued 30,000 shares of its P100 par value ordinary
share capital in exchange for a piece of land to be held for a future plant site. Blue
Corporation’s ordinary share was listed and traded at P108 per share on the same date. The
land has fair value of P3,200,000 value. The journal entry for the land would include which the
following?
Debit to Land P3,240,000
Correct!
Credit to Share Premium P200,000
Credit to Share Premium P240,000
Debit to Ordinary Share Capital P3,000,000

Question 8
3 / 3 pts
Gina subscribed for 30,000 shares of P 12 par value ordinary share for P15 per share. She paid
40% of the subscription as her initial payment. She was not able to pay the balance and her
stocks were declared delinquent. Interest and other expenses for sale totaled to P15,000. How
much the would be the total offered price for delinquent shares?
P195,000
P159,000
Correct!
P285,000
P231,000

Question 9
3 / 3 pts
A corporation issued 100 shares of $100 par value preferred shares for $150 per share. The
resulting journal entry would include which of the following?
a debit to paid-in capital in excess of preferred stock
a credit to cash
a credit to ordinary share capital
Correct!
 a debit to cash

Question 10
3 / 3 pts
The shareholders’ equity of JXN Corporation includes the following:

 Preference share capital, P 50 par P  5,000,000 

Share premium - preference     800,000

Subscribed preference share capital 1,000,000

Subscription receivable - preference    200,000

Ordinary share capital,  P25 pa 10,000,000

 Ordinary share capital,  P25 par    300,000

Share premium -Ordinary             550,000

The average selling price of preference share capital will be______________.

P68.00
P58.00
Correct!
P56.67
P50.00

Question 11
0 / 3 pts
Manny Corporation’s records included the following shareholders’ equity accounts:

Preference share capital par value P 15, authorized 200,000 share P 2,550,000
Share Premium - Preference 150,000
Ordinary share, no par, P 50 stated value, 100,000 shares authorized 3,000,000
Share Premium - Ordinary 100,000
Retained Earnings 200,000
How much is the total legal capital of Manny Corporation?
Correct Answer
P 5,650,000
P 5,750,000
You Answered
P 5,550,000
P 5,800,000

Question 12
3 / 3 pts
JXN Corporation has the following list account balances taken in the ledger. includes the
following:

Preference share capital, P 100 par                              P  10,000,000

Share premium - preference                                                    500,000
Subscribed preference share capital                                   2,000,000
Ordinary share capital,  P50 par                                        10,000,000
Share premium                                                                          500,000
Notes payable                                                                         1,000,000
Receivable from the highest Bidder                                       200,000
Gain on Extinguishment of Debts                                           100,000
Retained earnings                                                                  2,000,000
Subscribed ordinary share capital                                          300,000

If you are to prepare the shareholders’ equity section of JXN Corporation for December 2020,
how much should be the total amount of shareholders’ equity?

P23,300.000
P25,600,000
Correct!
P25,300,000
P26,600.000

Question 13
3 / 3 pts
A company issued 40 shares of P1 par value ordinary shares for P5,000. The journal entry to
record the transaction would include which of the following?
Correct!
credit of P40 to ordinary shares
debit of P20,000 to ordinary shares
debit of P4,000 to ordinary shares
credit of P20,000 to ordinary shares
Question 14
3 / 3 pts
JR Marketing Corp. has outstanding bonds payable.

Bonds payable P4,300,000

Accrued interest payable 30,000

The company issued 200,000 ordinary share capital P20.00 par and fair value of P 4,200,000 in
full settlement of the bonds payable and the accrued interest. The journal entry using
memorandum method would include which of the following?
Debit to Unissued ordinary share capital P4,000.000
Credit to Accrued interest payable P 30,000
Credit to Loss on extinguishment of debt P130,000
Correct!
Credit to Share Premium P200,000

Question 15
3 / 3 pts
Joy subscribed for 40,000 shares of P 10 par value ordinary share for P15 per share. She paid
45% of the subscription as her initial payment. She was not able to pay the balance and her
stocks were declared delinquent. Interest P10,000 and other expenses for sale totaled to
P8,000. On thebidding day nobody came to bid. The journal entry would include the
following?
Credit Receivable from the highest bidder P 238,000
Correct!
Debit to Treasury Shares P348,000
Credit to Share Premium P200,000
 Debit Treasury Shares P288,000

Question 16
3 / 3 pts
On October 12, 2020, Jay Corporation issued 20,000 shares of its P120 par value ordinary share
capital in exchange for a piece of land to be held for a future plant site. Jay Corporation’s
ordinary share was listed and traded at P130 per share on the same date. The land has fair
value of P2,640,000 value. How much is the share premium ?
Correct!
P240,000
P200,000
P40,000
P2,400,000

Question 17
3 / 3 pts
Boss Corporation was organized on May 5, 2020 with authorized shares of 500,000, P20 par
value ordinary shares. On May 1 2020 Issued 4,500 shares with a fair value of P22, in
payment of services of Mr. Cee, a lawyer. The journal entry method of recording for the
payment of legal service would include which the following?
Correct!
Debit Legal Service Expense P99,000
Debit Legal Services Expense P90,000
Debit Discount on Ordinary Share P9,000
Credit Unissued Ordinary Share P99,000
Question 18
3 / 3 pts
A company issued 30 shares of P0.50 par value of ordinary shares for P12,000. The credit to
share premium would be _____________.
Correct!
P11,985
P12,000
P15
P10,150

Question 19
3 / 3 pts
Zinc Corporation was organized on January 1, 2020 with authorized share capital of 100,000
shares of P20 par value ordinary shares. During 2020, Zinc Corporation had the following
transactions affecting the shareholders’ equity:
     Jan.    10   -   Issued 25,000 shares at P22 per share.

         May.  16   -   Issued 1,000 shares for legal services when the fair value was P24 per share.

         Oct.   15   -   Issued 5,000 shares for a piece of equipment when the fair value was P26 per share.

What amount should be reported as share premium?

P64,000
P54,000
P50,000
Correct!
P84,000

Question 20
3 / 3 pts
Leny subscribed for 35,000 shares of P 12 par value . She paid 70% of the subscription as her
initial payment. She was not able to pay the balance and her stocks were declared delinquent.
Interest and other expenses for sale totaled to P15,000. There are four bidders to pay the
offered price who for the following number of shares to be acquired.
  Bidders                      Bid

    Amy                 14,000 shares

    Bea                   23,000 shares

    Cathy                12,500 shares

    Daisy                18,500 shares

After the payment of the delinquent shares, how many shares would Vina received upon
issuance of stock certificates?
 12,500 shares
Correct Answer
22,500 shares
You Answered
None
12,000 shares