BATHEOAX.
QUIZ 2.
1. Shares of 1st Global StratDev stock cannot be purchased in any stock exchange or by just any individual.
This means that 1st Global StratDev is a(n)
a. Partnership c. Family corporation
b. Open corporation d. Close corporation
2. Ordinary shares carry all of the following rights except the right to
a. Share in profits c. Share in the dividends
b. Receive information about the d. None of the above
corporation
3. Which of the following is not a disadvantage of the corporate form of ownership?
a. Difficulty of formation c. Expense of incorporation and selling
b. Limited liability stock
d. Lack of secrecy
4. The following are the steps in the creation and organization of a corporation except
a. Incorporation
b. Promotion
c. Formal organization and commencement of business operations
d. None of the above
5. 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
a. Right of redemption c. Right to be sued
b. Pre-emptive right d. Concept of corporate entity
6. The advantage of a corporation from a partnership is
a. The death of a shareholder will not dissolve the corporation because of its power of succession.
b. Its management is centralized on the board of directors
c. Shareholders have limited liability
d. Shareholders are not general agents of the business.
e. All of the above.
7. The shareholders or members mentioned in the Articles of Incorporation originally forming and composing
the corporation and who are signatories thereof are called
a. Incorporators c. Promoters
b. Corporators d. Subscribers
8. The ordinary stock of the corporation entitling the owner to pro-rate dividends without any priority over
any other shareholders but equally with all other shareholders except preference shareholders is
a. Preference share c. Ordinary share
b. Guaranteed share d. Convertible share
9. Which of the following is a disadvantage of the corporate form of business?
a. Corporations lack mutual agency
b. There is a greater degree of government control and supervision
c. Ownership shares can be easily transferred
d. Owner’s liability is limited
10. The maximum number of ordinary shares that may be issued according to the corporation’s charter is
referred to as
a. Issued shares c. Authorized shares
b. Unissued shares d. Outstanding shares
11. Treasury stock is best described as
a. Unissued share
b. An asset acquired by making a cash disbursement
c. Reacquired share which was previously outstanding
d. Retirement of a portion of outstanding share which increases total equity.
12. On Jan. 6, 2023, ABC Corp. issues a share dividend to investors of record on Feb 3. 2023. When
determining how to account for this share dividend, which of the following factor is the most important
factor to ABC Corporation.
a. The par value of the shares c. The number of shares authorized
b. The market value of the shares d. The size of the share dividend.
Use the following facts to answer questions 13-14
The XYZ Corporation has 200,000 shares at P10 par value ordinary shares outstanding on Dec. 31, 2022. On Jan. 2,
2023, they declare a share dividend of 10,000 shares when the fair market value is P18. On the date of record, Feb 3,
2023, the share price is P15. The shares are issued on March 1, ,2023, when the market value of shares is P25.
13. When XYZ Corporation records the journal entry for the share dividend, retained earnings will be debited
for the number of new shares multiplies by which of the following amounts?
a. Par value of shares
b. Market value of the shares on Jan. 2, 2023
c. Market value of the shares on Feb. 3, 2023
d. Market value of the shares on March 1, 2023
14. When recording the journal entry to distribute the share dividend, XYZ Corporation will credit share
premium for
a. P80,000 c. P50,000
b. P100,000 d. P150,000
On June 25, 2023, Ayokona Corp. issues a 30% share dividend on its 200,000 shares of P10 par value ordinary
shares. The shares will be issued on July 8, 2023. The market price of Ayokona Corp. stock is P15 per share on June
25 and on the date the shares are distributed, the stock is selling for P12 per share.
15. The journal entry to record the declaration of the share dividend on June 25, 2023 will include a
a. Debit to retained earnings for P600,000
b. Debit to retained earnings for P900,000
c. Credit to share premium for P300,000
d. Credit to share premium for P200,000
16. The journal entry on June 25, 2023, will include a credit to ordinary shares distributable in the amount of
a. P200,000 c. P600,000
b. P300,000 d. P900,000
17. On July 8, 2023, the share premium account is credited for
a. P300,000 c. P600,000
b. P200,000 d. P0
18. Which of the following dividends will result in a decrease to total shareholders’ equity?
I. Large share dividend
II. Cash dividend
III. Small share dividend
a. I, II and III c. II only
b. II and III d. III only
19. Issued shares are the
a. Number of shares that have been distributed to shareholders
b. Total number of shares that can be issued by the company at any time
c. Number of shares that are owned by shareholders at the balance sheet date
d. Number of shares that the company has repurchased
20. ABC Corporation issued 10,000 shares of its P1 par value ordinary shares for a building. The building has
a fair value of P500,000. ABC Corporation’s ordinary share is currently selling for P45 per share. ABC
Corporation should record the building at
a. P10,000 c. P450,000
b. P440,000 d. P500,000
21. Which of the following is the most relevant is acquiring assets in exchange for share capital?
a. Fair market value of the share d. Issuance price of share already
b. Fair market value of the asset outstanding
c. Par or stated value of the share
22. Labanlang Corporation issued 10,000 shares of P20 par value ordinary shares at P50 per share. The credit
to share premium-ordinary is
a. P200,000 c. P300,000
b. P500,000 d. P700,000
23. ICANDOTHIS Corporation issued 10,000 shares of P20 par value ordinary shares at P24 per share.
ICANDOTHIS Corporation purchased its own stock at cost of P30 per share. The entry to record the
reacquisition is
a. Share premium Treasury 6,000
Treasury stock 24,000
Cash 30,000
b. Share premium Treasury 10,000
Treasury stock 20,000
Cash 30,000
c. Treasury stock 30,000
Cash 30,000
d. Treasury stock 10,000
Share premium treasury 20,000
Cash 30,000
24. T2025 Corporation paid a lawyer P5,000 to prepare its articles of incorporation. In recording this
transaction, it should debit
a. Ordinary shares c. Donated capital
b. Treasury stock d. Organization cost (expense)
25. R Corporation issued 1,000 shares of its P5 par ordinary shares to S as compensation for 1,000 hours of
performed. S usually bills P160 per hour for legal services. On the date of issuance, the stock was trading
on public exchange at P140 per share. By what amount should share premium increase as a result of this
transaction?
a. P 135,000 c. P155,000
b. P140,000 d. P160,000
26. The par value of ordinary shares is equal to
a. The amount received by the corporation when the share was originally issued.
b. The amount at which the share is currently trading in an organized market
c. A designated peso amount per share established in the articles of incorporation
d. The book value of the ordinary share
Items #27-30
The shareholder’s equity of Anditoako Corporation as of December 31, 2023 is as follows:
10% Preferred stock, P15 par, authorized 700,000 shares
Issued P3,150,000
Subscribed 2,250,000
Subscription Receivable-Preference 750,000
Ordinary stock, no par, P25 stated value, authorized, 750,000 shares
Issued P11,250,000
Subscribed 2,250,000
Subscription Receivable 1,350,000
Additional paid in capital
Share Premium-preference 2,160,000
Shaer Premium-ordinary 3,760,000
27. How much is the authorized share capital of preference share?
a. P5,400,000 c. P10,500,000
b. P11,250,000 d. P10,750,000
28. How much is the total authorized capital of ordinary shares?
a. P17,500,000 c. P18,500,000
b. P18,000,000 d. P18,750
29. The number of shares of preference shares issued?
a. 210,500 c. 210,000
b. 215,000 d. 211,000
30. The number of ordinary stock issued?
a. 540,000
b. 450,100
c. 440,000
d. 450,000
