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1st year deptals review > PRINCIPLES OF ACCOUNTING > Flashcards

PRINCIPLES OF ACCOUNTING Flashcards

1
Q

As to whether corporations exist by statutory authority or not:

One which exists without statutory authority

A

Quasi-corporation

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2
Q

As to whether corporations exist by statutory authority or not:

One which exists by statutory authority.

A

True corporation

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3
Q

Corporation where One whose shares are owned by another corporation (parent corporation) which has control over the corporation

A

Subsidiary corporation

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4
Q

A Corporation where One which owns the shares of another corporation (subsidiary corporation) and having control over the latter.

A

Parent (or holding)

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5
Q

Corporation where One that is formed for the government of a portion of the State (e.g., provinces, barangays).

A

Public c

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6
Q

__ corporation - One that is formed for private purpose or end.

A

Private corporation

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7
Q

____ Corporation - One whose ownership is restricted to selected persons.

Shares of stocks of a close corporation are not listed in any stock exchanges.

A

Close Corporation

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8
Q

___ Corporation - One whose ownership is open to the public.

Shares of stocks of an open corporation are listed in the stock exchanges.

A

Open Corporation

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9
Q

As to their legal right to corporate existence:

____ Corporation - One which has failed to comply with one or more of the legal requirements for its existence.

A corporation that exist in fact but not in law.

A

De facto Corporation

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10
Q

As to their legal right to corporate existence:

___ Corporation - One which has complied with all the legal requirements for its existence.

A corporation that exist in fact and in law.

A

De jure Corporation

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11
Q

____ corporation - One incorporated under any laws other than the Philippine laws

A

Foreign

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12
Q

____ corporation - One incorporated under the Philippine laws.

A

Domestic

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13
Q

____ corporation - One formed for business or profit.

A

Civil

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14
Q

_____ corporation - One formed for charitable purposes.

A

Eleemosynary corporation

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15
Q

____ corporation - One formed not for religious purposes.

A

Lay corporation

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16
Q

____ corporation - One formed for religious purposes.

A

Ecclesiastical

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17
Q
  • One that is composed of more than one member or corporator
A

Corporation aggregate

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18
Q

One that is composed of only one member or corporator and his successors, such as bishop, priest, minister or rabbi.

A

Corporation sole

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19
Q

It represents economic resources that shareholders invest in a corporate entity.

A. Preference share.
B. Ordinary share.
C. Share premium.
D. Paid-in capital.

A

D. Paid-in capital

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20
Q

A share capital that has a value printed on the stock certificate is called:

A. Printed value share capital
B. Par value share capital.
C. Stated value share capital
D. Permanent value share capital

A

B. Par value share capital

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21
Q

The par value is used to determine the share’s:

A. maximum Issue price.
B. minimum issue price.
C. fair value.
D. market price.

A

B. minimum issue price.

22
Q

A share capital that has a value stated in the articles of Incorporation but none on the face of the stock certificate is called:

A. Printed value share capital
B. Par value share capital
C. Stated value share capital
D. Temporary value share capital

A

C. Stated value share capital

23
Q

A formal written document evidencing the ownership in a corporation is called:

A. Share of stock
B. Stock certificate
C. Stock documentation
D. Share capital

A

B. Stock certificate

24
Q

Which of the following statements regarding stock certificate is correct?

A. It is an intangible property that represents the right of a shareholder in a corporation.

B. Generally, a stock certificate is issued only when fully paid.

C. A stock certificate is issued only for preference shares.

D. A stock certificate is issued only for ordinary shares.

A

B. Generally, a stock certificate is issued only when fully paid.

25
Q

It represents the residual ownership interest in the corporation.

A. Common stock
B. Preferred stock
C. A and B
D. Either A or B

A

A. Common stock

26
Q

Which of the following will not require journal entry under the memorandum entry method?

A. Issuance of shares.
B. Subscription of shares.
C. Authorization by the SEC of shares to be issued.
D. None of the above.

A

C. Authorization by the SEC of shares to be issued.

27
Q

The par value of shares issued is normally recorded in which ofthe following?

A. Additional paid in capital account.
B. Share capital account.
C. Retained earnings account.
D. Any of the foregoing.

A

B. Share capital account.

28
Q

Which of the following classification of shares is classified as voting stocks?

A. Common stocks.
B. Preferred stocks.
C. Both A and B.
D. Neither A nor B.

A

A. Common stocks

29
Q

If shares are issued for cash, the shares issued shall be measured at the:

A. Amount of cash received.
B. Fair value of the shares on the date of issuance.
C. Par value of the shares issued.
D. Stated value of the shares issued.

A

A. Amount of cash received.

30
Q

If shares are issued for non-cash consideration, the shares issued shall be measured at the:

A. Fair value of the non-cash consideration received.
B. Carrying value of the non-cash consideration received.
C. Fair value of the shares on the date of issuance.
D. Par value of the shares issued.

A

A. Fair value of the non-cash consideration received.

31
Q

When shares are issued for non-cash consideration, what is the least appropriate basis for recording the said transaction?

A. Fair value of the services.
B. Fair value of the shares.
C. Par value of the shares.
D. Any of these provides an appropriate basis for recording the
transaction.

A

C. Par value of the shares

32
Q

This is pertains to the residual interest of the owners in the assets of a corporation after deducting all its liabilities.

  • This refers to the net assets of a corporation.
A

Shareholder’s Equity

33
Q

This Represents the interest or right of a shareholder in a corporation.
► An intangible property.

A

Shares

34
Q

This is a document evidencing the right of a shareholder in a corporation.

► A tangible property.

A

Share Certificate

35
Q

A share capital that has a value stated in the articles of incorporation and on the face of the stock certificate.

► PURPOSE: To fix the minimum issue price of the share.

► Issuing shares at an amount below ___ is not allowed in the Philippines.

A

Par value share capital

36
Q

A share capital that has a value stated in the articles of incorporation but none on the face of the stock certificate.

  • A share capital that has no value stated either in the articles of Incorporation nor on the face of the stock certificate
A

No par, stated value share capital

37
Q

What are the 2 BASIC CLASSIFICATION OF SHARES?

A
  1. Common stock
  2. Preferred stock
38
Q

Represents the residual ownership interest in the corporation.

► Accounting term: Ordinary share
► Basic rights of an ordinary shareholder:

(1) Right to vote.
(2) Right to receive his share from the profits of the corporation.
(3) Right to participate in the distribution of corporate assets in case of dissolution.
(4) Right to purchase, on a pro-rata basis, new issues of ordinary shares (known as the pre-emptive right).

A

Common Stock

39
Q

A shares of stock issued by a corporation may be given preference in the distribution of dividends and in the distribution of corporate assets in case of liquidation, or such other shares (Sec. 6, RCCP).

► Accounting term: Preference share
► Can be issued only with par value.
►Holders of this shares have no voting rights.

►Kinds of preferred stock as to dividends:
► A corporation is not allowed to issue ___ share without ordinary share, but it can issue ordinary share with or without ____ share.

A

Preferred stock

40
Q

Rules Issuance of Shares:

If issued for ____, the value of the shares issued is the amount of cash received.

A

Cash

41
Q

Rules on Issuance of Shares:

If issued for ___ consideration, the value of the shares issued is the (in the order of priority):

  1. Fair value of the ___ consideration received.
  2. Fair value of the shares issued.
  3. Par value of the shares issued.
A

Non-cash

42
Q

► A principle of Judicial invention which says that “corporate assets are held as a trust fund for the benefit of shareholders and creditors”.

• The legal capital is based on this doctrine.
► A corporation can pay dividends to owners but only to the extent of the unrestricted retained earnings.
► A corporation cannot pay dividends if it has a deficit

A

Trust Fund Doctrine

43
Q

Subscription receivable from sale of patures which are not Collectible within 12 months from the balance sheet date shall be presented as a:

A. Current asset.
B. Non-current asset.
C. Deduction from the related subscribed share capital under shareholders’ equity section of the statement of financial position.
D. Trade receivable.

A

C. Deduction from the related subscribed share capital under shareholders’ equity section of the statement of financial position.

44
Q

Subscription receivable from sale of shares which are collectible within 12 months from the balance sheet date shall be presented as a:

A. Current asset.
B. Non-current asset.
C. Deduction from the related subscribed share capital under shareholders’ equity section of the statement of financial position.
D. Trade receivable.

A

A. Current asset

45
Q

During the current year, ordinary shares were subscribed for a price in excess of par, the excess of the subscription price over par shall be recorded:

A. When the subscription is recorded.

B. When the subscription is collected in full.

C. When the ordinary shares are issued.

D. In no case shall a share premium be recorded when shares are sold on a subscription basis

A

A. When the subscription is recorded

46
Q

When a corporation issues its share capital:

A. It increases the authorized shares of the corporation.
B. It increases the shares outstanding.
C. It decreases the authorized shares of the corporation.
D. Band C

A

B. It increases the shares outstanding.

47
Q

Shareholders’ equity represents:

A. The maximum amount that can be borrowed by the corporation.
B. A claim against specific assets contributed by the owners.
C. A claim against a portion of the assets of a corporation.
D. The ownership of stockholders on the assets of a corporation.

A

C. A claim against a portion of the assets of a corporation

48
Q

The pre-emptive right of an ordinary stockholder is:

A. The right to share proportionately in the assets of the corporation upon liquidation.
B. The right to receive dividends every year.
C. The right to share proportionately in any new issue of shares of different class.
D. The right to share proportionately in any new issue of shares of the same class.

A

D. The right to share proportionately in any new issue of shares of the same class.

49
Q

The residual interest in a corporation belongs to:

A. the creditors of the corporation.
B. the preferred shareholders.
C. the ordinary shareholders.
D. all the shareholders.

A

C. the ordinary shareholders.

50
Q

An ordinary shareholder does not possess the right to:

A. receive his share from the profits of the corporation.
B. participate in the distribution of corporate assets in case of dissolution.
C. right to purchase, on a pro-rata basis, new issues of preference shares.
D. vote

A

C. right to purchase, on a pro-rata basis, new issues of preference shares.

51
Q

Share issuance cost is treated as:

A. an expense.
B. a deduction from the related share premium arising fromsuch share capital issuance.
C. an extraordinary expense.
D. either A or B, at the option of the corporation.

A

B. a deduction from the related share premium arising fromsuch share capital issuance.

1st year deptals review (4 decks)

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