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ACTBFAR LE 4 > True or False (ES4) > Flashcards

True or False (ES4) Flashcards

1
Q

One advantage of a corporation is its being subject to unlimited liability. True or False?

A

False. Its advantage is being a limited liability (creditors cannot run after the personal assets of the corporation).

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2
Q

The minimum number of incorporators required in order to form any corporation is two. True or False?

A

False. Just one.

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3
Q

Any organization cost incurred in the formation of a corporation is charged as an expense. True or False?

A

True

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4
Q

The minimum number of directors or trustees in order to form any corporation is one. True or False?

A

True

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5
Q

The bylaws is a document which contains matters relating to the internal governance of the corporation. True or False?

A

True

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6
Q

Each incorporator is required to be an owner or subscriber of at least one share. True or False?

A

True

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7
Q

A de jure corporation is also referred to as a corporation in fact. True or False?

A

False. It is referred to as de facto. De jure is a corporation that complies with ALL legal requirements.

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8
Q

A non-stock corporation is composed of shareholders. True or False?

A

False. A stock corporation is composed of shareholders.

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9
Q

Any corporation which is incorporated under any law other than the Revised Corporation Code of the Philippines is considered as a foreign corporation. True or False?

A

True

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10
Q

All incorporators are considered as corporators and vice versa. True or False?

A

False. Not all incorporators are corporators of the corporation

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11
Q

A corporation’s authorized share capital refers to the maximum number of shares the corporation is permitted to issue. True or False?

A

True

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12
Q

The legal capital of a corporation is always composed of the aggregate par value of its issued and subscribed shares. True or False?

A

False. It can also include Share Premium.

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13
Q

If a corporation would only have one class of shares, this may either be ordinary or preference share. True or False?

A

False. There 4 types of shares they can issue namely par value share, no par value share, ordinary share, and preference share.

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14
Q

When shares are issued in exchange of services, the fair value of the shares on such date is the priority over par value of the shares for measurement purposes. True or False?

A

True

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15
Q

A corporation’s contributed capital is technically the same as its legal capital. True or False?

A

False. Legal Capital is the portion of contributed capital that cannot be distributed to the owners during the lifetime of the corporation while Capital Contribution is amount contributed by the shareholders.

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16
Q

A share may be issued above but never below its par value. True or False?

A

True

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17
Q

The minimum consideration for issuance of no-par value shares is ₱2.00. True or False?

A

False. It’s supposed to be at least ₱5.00.

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18
Q

All corporations are permitted to issue no-par value shares. True or False?

A

False. Corporations can issue par values shares.

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18
Q

The Share Capital account is always credited using the share’s par or stated value. True or False?

A

True

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19
Q

Share certificates are issued upon subscription. True or False?

A

False.

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20
Q

Treasury shares are shares of stock which have been issued and fully paid for, but subsequently re-acquired by the issuing corporation. True or False?

A

True

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21
Q

A treasury share may never be reissued below the share’s par value. True or False?

A

False. Treasury shares can be reissued below share’s par value.

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22
Q

Treasury share transactions may decrease but never increase a corporation’s accumulated profits. True or False?

A

True

23
Q

When treasury shares are reissued at above cost, there is an income recognized from the reissuance. True or False?

A

False.

24
Q

A treasury share is not an outstanding share. True or False?

A

True

25
Q

Under the cost method, treasury shares are either debited or credited based on the share’s par value. True or False?

A

False.

26
Q

Costs incurred in conducting a public auction for a delinquent subscription is recorded as an expense of the corporation. True or False?

A

False. It is recorded as

27
Q

The highest bidder in a public auction for a delinquent subscription is the person willing to pay the offer price for the most number of shares. True or False?

A

False.

28
Q

In all cases, the defaulting subscriber still receives a certain number of shares, even though his subscription was declared delinquent. True or False?

A

False. If the subscription is delinquent, the defaulting subscriber does not receive shares.

29
Q

When there are no bidders in the public auction, the shares are issued in favor of the corporation and are considered as treasury shares. True or False?

A

True

30
Q

The liability to pay cash dividends is recognized on the date of record. True or False?

A

False.

31
Q

The declaration and distribution of share dividend does not affect a corporation’s total shareholders’ equity. True or False?

A

True

32
Q

All issued shares are entitled to receive dividends. True or False?

A

False.

33
Q

Cumulative preference share is entitled to receive current year dividends only. True or False?

A

False.

34
Q

A deficit occurs when a corporation’s Accumulated Profits account has a debit balance. True or False?

A

True

35
Q

An appropriation out of a corporation’s unrestricted accumulated profits decreases amount available for dividend distribution. True or False?

A

True

36
Q

A share dividend distributable is considered as a current liability of the corporation. True or False?

A

False.

37
Q

The declaration of a small share dividend requires that Accumulated Profits is charged for the par value of share dividends declared. True or False?

A

False.

38
Q

Before and after distribution of share dividends, a shareholder’s percentage interest in the corporation does not change. True or False?

A

True

39
Q

The participation feature of preference shares allows holders of these shares to receive more dividends than ordinary shareholders in all cases. True or False?

A

False.

40
Q

Payment of cash dividend reduces a corporation’s accumulated profits. True or False?

A

False.

41
Q

Treasury shares are entitled to receive any form of dividends. True or False?

A

False.

42
Q

Once the reason behind any appropriation made by the corporation in its Accumulated Profits account ceases to exists, a reversal should be made. True or False?

A

True

43
Q

A reversal of any appropriation in a corporation’s Accumulated Profits does not affect total shareholders’ equity. True or False?

A

True

44
Q

A 1-for-8 share dividend declaration is considered as large share dividend. True or False?

A

False.

45
Q

Appropriations made out of corporation’s free accumulated profits reduces total shareholders’ equity. True or False?

A

False.

46
Q

Treasury shares are deducted in computing shareholders’ equity. True or False?

A

True

47
Q

Share dividend declaration does not affect shareholders’ equity. True or False?

A

True

48
Q

Sale of donated shares does not affect shareholders’ equity. True or False?

A

False.

49
Q

The amount presented as total shareholders’ equity in the statement of changes in shareholders’ equity also appears in the statement of financial position. True or False?

A

True

50
Q

Subscriptions Receivable is generally deducted when computing for total shareholders’ equity. True or False?

A

True

51
Q

Reissuance of treasury shares does not affect shareholders’ equity. True or False?

A

False.

52
Q

Net loss for the period increases total shareholders’ equity. True or False?

A

False.

53
Q

Issued and subscribed shares are both considered in computing for shareholders’ equity. True or False?

A

True

54
Q

Cash dividends declared decreases total shareholders’ equity. True or False?

A

True

ACTBFAR LE 4 (10 decks)

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