L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

FINAL EXAMINATION – BL 2 Business Law and Regulations

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

1. In three of the following wrongful acts of partners, the partnership is solidarily liable with all of
the partners to third persons. Which one is the exception?
a. For loss or injury caused to a third person by reason of the wrongful act or omission of a
partner acting in the ordinary course of business.
b. Where a partner acting within the scope of his apparent authority receives money or
property of a third person and misapplies it.
c. Where the partnership receives money or property of a third person in the ordinary course
of business and such money or property is misapplied by a partner while it is in the custody
of the partnership.
d. For loss or injury caused to a third person by reason of the use of partnership property by a
partner for personal purpose.
2. The partnership will bear the risk of the loss of three of the following things. Which is the
exception?
a. Things contributed to be sold.
b. Fungible things or those that cannot be kept without deteriorating.
c. Things contributed so that only their use and fruits will be for the common benefit.
d. Things brought and appraised in the inventory.
3. Campos, Urbano, Tamesis and Encanto are partners in CUTE Company each one contributing
P300,000.00 except for Encanto who is an industrial partner. The partners agreed that Campos
shall be exempted from liability to third persons. Three years of continued losses after the
formation of the partnership resulted in unpaid partnership liabilities to third persons
amounting 500,000. Partnership assets have also been reduced to 200,000. From whom may
third third persons collect partnership debts?
a. From the partnership assets of 200,000; thereafter, from the partners for their separate
assets at 100,000 each except Campos who was exempted from liability to third persons by
agreement.
b. From the partnership assets of 200,000; thereafter, from the partners for their separate
assets at 100,000 each except for Encanto since as industrial partner does not share in the
losses.
c. From the partnership assets of 200,000; thereafetr, from all partners for their separate
assets at 75,000 each including Campos and Encanto.
d. From the partnership assets at 200,000; thereafter, from Urbano and Tamesis only for their
separate assets at 150,000 since Campos was exempted from liability by agreement, while
Encanto, being an industrial partner is not liable for losses.
4. One of the following is not a characteristic of partnership.
a. Real, in that the partners must deliver their contributions in order for the partnership
contract to be perfected.
b. Principal, because it can stand by itself.
c. Preparatory, because it is means by which other contracts will be entered into.
d. Onerous, because the parties contribute money, property or industry to the common fund.
5. Three of the following will cause the automatic dissolution of a general partnership. Which one
will not?
a. When any event makes it unlawful for the business of the partnership to be carried on or for
the members to carry it on in partnership.
b. Expulsion of any partner from the business bona fide in accordance with such a power
conferred by the agreement between the partners.
c. A partner becomes in any way incapable of performing his part of the partnership contract.

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 d. The insolvency of a partner or of the partnership.
6. The partnership is not bound in three of the following acts of a partner after dissolution.
However, it is bound in one. Which is it?
a. Where the partner acting is insolvent.
b. When it is unlawful to carry on the business.
c. When the partner has no authority ro wind up partnership affairs and the third person is a
previous cerditor who had no knowledge of the partner’s lack of authority.
d. When a partner has no authority to wind up partnership affairs and the third person is a
new creditor who has not read the publication of the lack of authority of the partner in a
newspaper of general circulation in the place or places where the partnership business is
carried on.
7. Which of the following omissions will make a partnership formed as a limited partnership liable
as a general partnership?
I. The certificate is not signed and sworn to by all the partners.
II. The certificate is not registered with the Securities and Exchange Commission.
III. The partnership name does not include the word “Limited” or “Ltd.”, its abbrevation, in
the certificate.
a. I and II
b. II and III
c. I and III
d. I, II and III
8. Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of a partner.
b. Insolvency of a partner.
c. When the partnership business becomes unlawful.
d. Insanity of a partner.
9. John Solanda and Sons is a partnership composed of three partners, namely: Robert Solanda,
Simon Solanda and Theodore Solanda. The partners are the sons of JohnSolanda who has retired
from business who suggested that they include his name in the firm to give them an advantage
since he is well-known in the business community.
I. John Solanda shall have all the rights of a general partner.
II. John Solanda shall have all the liabilities of a general partner.
Based on the foregoing facts:
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.
10. The certificate of incorporation of Seven Stars Corporation, a trading corporation, was issued
although only 2 of its 5 incorporations are residents of the Philippines. Three, however, are
citizens of the Philippines. The corporation created in such a situation is a:
a. De jure corporation.
b. Corporation by estoppel
c. De facto corporation
d. No corporation was created at all.
11. A stock corporation is similar to a non-stock corporation in what respect?
a. Transferability of shares or of membership.
b. Method of voting directors or trustees.
c. Voting of stockholders or members in person or by proxy.
d. Term of directors or trustees.
12. These statements are presented to you:
I. The sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all
of corporate property requires the vote of a majority of the board of directors or
turstees, and 2/3 of the outstanding capital stock or 2/3 of the members.
II. The board of directors or trustees may abandon the sale or other disposition of all or
substantially all of the corporate property without further approval from stockholders or
members.
In the 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.
13. These equations are presented to you:
I. A+B=A
II. A+B=X

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 What do the above equations represent?
a. I, merger; II, consolidation
b. I, consolidation; II, merger
c. Both equations represent merger
d. Both equations represent consolidation
14. A stock holder is entitled to the payment of the fair value of his shares when he dissents from
certain corporate acts. Such fair value shall be the fair value of the shares as of the day:
a. On which the vote was taken, excluding any appreciation or depreciation in anticipation of
such corporate action.
b. Prior to the date on which the vote was taken, excluding any appreciation or depreciation in
anticipation of such corporate action was taken.
c. On which the vote was taken, including any appreciation or depreciation in anticipation of
such corporate action.
d. Prior to the date on which the vote was taken, including any depreciation or appreciation in
anticipation of such corporate action was taken.
15. The articles 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.
16. What may be the composition of the executive committee of a corporation?
a. Directors
b. Stockholders who are neither officers nor directors.
c. Officers who are neither stockholders nor directors.
d. A combination of a, b and c.
17. Under this theory, the nationality of a corporation is that of the country under whose laws it was
formed.
a. Control test
b. Incorporation test
c. Domiciliary test
d. Grandfather rule
18. A is a director and owns 50% of the outstanding capital stock of Ace Corporation which is
engaged in the trading of computers. Ace Corporation purchased computer tables from Top
Corporation of which A is also a director and owns 15% of its outstanding capital stock. The
articles of incorporation of both corporations provide for 5 directors. In the approval of the
contract for the said purchase, A did not attend the meeting of the board of directors of Ace
Corporation, while in the meeting of the board of directors of Top Corporation which was called
for the same purpose, directors A, B, C and D were present with all of them voting for the
approval of the contract. Assuming that there is no fraud and that the contract is fair and
reasonable under the circumstances, the contract between Ace Corporation and Top
Corporation is:
a. Valid.
b. Voidable at the option of Top Corporation.
c. Unenforceable against Top Corporation.
d. Void because corporations with interlocking directorate should not enter into a contract
with each other.
19. Which of the following statements pertaining to non-stock corporations is incorrect?
a. Members may vote by mail.
b. The number of trustees may be more than 15.
c. Any incidental income that it may earn may be distributed as dividends to its members.
d. The meetings of members may be held outside the city or municipality where the principal
office of the corporation is located.
20. S is the registered owner of 500 shares of stock of XYZ Corporation whose articles of
incorporation provide for 11 directors. In the annual election of directors for 2021, 12
stockholders filed their certificates of candidacy for the position, namely, A, B, C, D, E, F, G, H, I,
J, K and L. K and L are minority stockholders whom S wishes to elect to represent him and the
other minority stockholders in the board. In th said election of directors, S may cast a maximum
of:
a. 500 votes
b. 6,000 votes
c. 5,500 votes
d. 1,000 votes

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21. The following statements pertaining to the power of a corporation to issue non-voting shares
are presented to you for evalutaion:
I. Those classified as “redeemable” or “preferred” may be deprived of the voting right.
II. All shares of the corporation may be deprived of the voting right.
III. Non-voting shares may vote in certain corporate acts such as in the amendment of the
articles of incorporation.
a. I and II are true.
b. II and III are true.
c. I and III are true.
d. All statements are true.
22. These statements are presented to you:
I. Under the Corporation Code, a close corporation is one whose members belong to the
same family. In other words, it is a family corporation.
II. Banks, insurance companies and educational institutions, among other corporations,
cannot be incorporated as a close corporation.
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.
23. Which of the following statements concerning a close corporation is false?
a. The stockholders may agree among themselves to the effect that they are partners among
themselves.
b. Any action of the board of directors without a meeting shall be valid if all the stockholders
have actual or implied knowledge of the action and they make no prompt objection thereto
in writing.
c. In case of deadlock in management, the SEC may order the corporation to acquire its own
shares of stock provided it has unrestricted retained earnings.
d. A close corporation shall not list in any stock exchange or make any public offering of any of
its stock of any class.
24. A stock corporation, in general, is taxed in the same manner as a:
a. General professional partnership.
b. Non-general professional partnership.
c. Sole-proprietorship.
d. Cooperative.
25. Shares that may be issued at a price lower than 5.00 per share are:
a. Par value shares.
b. No-par value shares.
c. Both a and b
d. Neither a nor b.
26. 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 foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only statement I is true.
d. Only statement II is true.
27. The highest bidder in a delinquency sale is the one willing to pay the:
a. Highest amount for the highest number of shares.
b. Lowest amount for the lowest number of shares.
c. Full amount of the balance of the subscription, accrued interest, cost of advertisement and
expenses of sale for the smallest number of shares.
d. Full amount of the balance of the subscription, accrue interest, cost of advertisement and
expenses of sale for the highest number of shares.
28. Which of the following is an incorrect composition of the capital stock of a corporation?
a. Both par value and no-par value shares.
b. Both preferred and common shares.
c. Either par value or no-par value shares.
d. Either common or preferred shares.
29. These statements are presented to you:
I. A director is an agent of the corporation by virtue of his being elected as a director.

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 II. A director who owns the controlling interest in a corporation has only one vote in the
meeting of the board of directors.
In the evaluation of the foregoing 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.
30. Which os the following statements concerning the name of a partnership is false?
a. The partnership name may include the name of only one of the partners.
b. The partnersip name may include the names of two or more, but not all of the partners.
c. The partnership name may include the names of all of partners.
d. The partnership cannot adopt a name which does not include the name of atlest one of the
partners.

II. True or False: Write TRUE if the statement is correct; write FALSE if the statement is incorrect.

31. A corporation is automatically dissolved if it does not formally organize; commence the
transaction of its business or the construction of its works within two years from the date of its
incorporation.
32. In the meetings of the board of directors, the vote required for the approval of an act is the
majority of those present provided there is a qourum except in the election of the officers which
requires majority of total number of the board of directors.
33. A foreign corporation shall not be allowed to do business in the Philippines if the laws of the
country under which it was incorporated do not allow Philippine corporations or citizen to do
business in the said country.
34. All persons who assume to acts as a corporation knowing it to be without authority to do so
shall be liable as general partner for all debts and damages arising as a result thereof.
35. The shortening of the corporate existence of a corporation will result in the dissolution of the
corporation upon the expiration of the shortened term.
36. Redeemable shares may be reacquired by a corporation only if it has unrestricted retained
earnings.
37. Treasury shares, since they are issued, are outstanding shares.
38. The due existence of a de facto corporation may be attacked collaterally in a proceeding.
39. A corporation may validly donate funds to a political party or candidate provided the amount of
the donation is reasonable.
40. If no payment is made by a subscriber on the due date of his subscription, his shares becomes
delinquent on the day following.
41. Shares of stock may be issued for service to be performed at some future time such as that to be
rendered by a lawyer for the increase in the capital stock of a corporation.
42. A contract entered into between a corporation and one of its directors may still be valid even if
such director was present in the board meeting for the approval of the contract.
43. A man and a woman living together as husband and wife without the benefit of the marriage
may enter into a universal partnership.
44. The sharing of gross returns does not of itself establish a partnership even if the persons sharing
them have a joint or common interest in the property from which the returns are derived.
45. A partnership whose capital in money or property amounts to 3,000 or more does not acquire
juridical personality if the contract is not recorded with the Securities and Exchange
Commission.
46. An artificial person like a corporation may be a partner in a partnership.
47. A limited partner may assign his interest to another person.
48. A partner may be a limited and general partner at the same time.
49. A newly-admitted partner is liable for partnership debts contracted before his admission to the
extent of his contribution, unless there is a contratry stipulation.
50. When a partner is not authorized to act for the partnership and the act of the partner is not for
apparently carrying on the business, the partnership shall be bound by the act of such partner if
the third person was not aware of the partner’s lack of authority.

III. Identification:

51. He contributes services to the partnership.

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 54. They refer to the rules of action adopted by a corporation for its own government and for the
government of its stockholders or members and those having the direction, management and
control of its affairs.
55. Powers granted to a corporation by its charter.
56. Applicable generally in times of war when a corporation is considered an enemy by the country
under which it operates although it may have been formed under the laws of such country.
57. A method of determining whether the percentage of Filipino equity in nationalized or partly
nationalized areas of activities is diminished when there are several layers of corporate
stockholders.
58. The right of existinf stockholders to purchase or subscribe to new issuances or dispositions of
shares, in proportion to their respective stockholdings, before such shares are offered to the
public.
59. An act of a corporation performed outside its express, implied and incidental powers.
60. The separate personality of a corporation is disregarded if it is used for an illegal or fraudulent
purpose or to evade faithful compliance of an obligation.
ajmiranda
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Good luck and God bless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

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