cfas mock quiz 1

• The right of succession allows the transfer of share capital entirely upon the discretion of the shareholders which does not affect the existence of the corporation.

  True
• Corporate creditors ordinarily have recourse only to corporate assets in satisfaction of their claims.

  True
• The date when the board of directors announces its intention to pay dividends is known as the date of issuance.

  False
• The By-Laws of a Corporation must be filed within one month from the filing of the Articles of Corporation with the Securities and Exchange Commission (SEC).

  False
• Property, plant and equipment held for distribution to shareholders are measured in the statement of financial position at the lower of the fair value and their carrying value.

  True
• Subscription receivable is reported as a current asset if it is collectible within the twelve months from the end of the reporting period.

  True
• A partnership is managed by the partners and a corporation is managed by the board of directors composed of all the shareholders.

  False
• The legal capital always cannot be distributed as dividends under the law to protect the stockholders.

  False
• Documentary stamp tax, underwriting costs, and newspaper publication fees directly related to the issuance of shares are recognized as deductions from equity.

  True
• Under Republic Act No. 11232, a corporation with a single stockholder is considered a One Person Corporation.


  True
• In a sale of delinquent shares at a public auction, the highest bidder is one who is willing to pay the unpaid subscription price, the expenses related to the delinquent shares, and accrued interest in exchange for the lowest number of shares.

  True
• Corporators refer to the persons mentioned in the Articles as originally forming and composing the corporation, having signed the Articles and acknowledged the same before notary public.

  False
• The Corporation Code requires that at least 25% of the unissued share capital must be subscribed, and at least 25% of the subscribed shares must be paid by the subscribers.

  False
• In a One Person Corporation (OPC), the single stockholder is considered the corporate secretary and treasurer.

  False
• When a subscriber is declared by a corporation as delinquent, such delinquent subscriber will not receive any share on account of his subscription.

  False
• Retained earnings may not be increased as a result of share capital transactions.

  True
• If the company announced a share dividend in January to be paid in March, the liability will increase in January and the contributed capital will decrease in March.

  False
• As a general guideline, a bonus issue of 20% or less of the number of shares previously outstanding is considered as a small bonus issue.

  False
• The declaration of a bonus issue is recorded only in a memorandum entry.

  False
• In the process of closing the books of the corporation, the resulting balance of income summary is transferred to the retained earnings account.

  True
• 1. During its first year of operations, Katya Corporation had the following transactions relating to its ordinary share

  • Issued 80,000 shares for cash at P60 per share.

  • Issued 500 shares to lawyers in payment of a bill for P35,000 for services rendered in helping the company to register the corporation.

  • Issued 30,000 shares for cash at P68 per share.

  • Issued 10,000 shares for cash at P75 per share.

  If the par value of the share is P50, what should be the balance of the Ordinary Share Capital?

  6,025,000
• 1. During its first year of operations, Katya Corporation had the following transactions relating to its ordinary shares:

  • Issued 80,000 shares for cash at P60 per share.

  • Issued 500 shares to lawyers in payment of a bill for P35,000 for services rendered in helping the company to register the corporation.

  • Issued 30,000 shares for cash at P68 per share.

  • Issued 10,000 shares for cash at P75 per share.

  If the share capital has no par value and no stated value, what should be the balance of the Ordinary Share Capital?

  7,625,000
• Katya Corporation transactions relating to ordinary shares


  1. Issued 80,000 shares for cash at P60 per share

  2. Issued 500 shares to lawyers in payment of a bill for P35,000 for services rendered in helping the company to register the corporation

  3. Issued 30,000 shares for cash at P68 per share

  4. Issued 10,000 shares for cash at P75 per share
• Fees paid by the corporation


  • Philippine Stock Exchange listing fees of P95,000
  • Underwriting costs of P10,000
  • Public relations consultant fees of P15,000
  • SEC registration fees of P35,000
• The balance of the Share Premium - Ordinary Share should be 350,000
• B. Anetra Corporation issues 500 ordinary shares and 100 preference shares, both with par value of P100, for lump sum price of P85,000.

  Assume that each ordinary share sells for P150 and each preference share sells for P120. How much shall be credited to Share Premium - Ordinary?

  23,276
• B. Anetra Corporation issues 500 ordinary shares and 100 preference shares, both with par value of P100, for lump sum price of P85,000.

  Assume that each ordinary share sells for P140 and that there is no available market price for the preference share. How much shall be credited to Share Premium - Preference?

  5,000
• C. Jinkx Corporation received authorization to issue 100,000 shares of P25 par value ordinary share capital.

  • Received subscription from from Sioson for 20,000 shares at P30 per share, receiving 40% of the subscription price as down payment.

  • On due date, Sioson failed to pay the balance of the subscription price. The shares were declared delinquent and were advertised for sale at a public auction, Jinkx paying P5,000 advertising costs.

  How much was the Receivable from the Highest Bidder?

  365,000
• C. Jinkx Corporation received authorization to issue 100,000 shares of P25 par value ordinary share capital.

  • Received subscription from from Sioson for 20,000 shares at P30 per share, receiving 40% of the subscription price as down payment.

  • On due date, Sioson failed to pay the balance of the subscription price. The shares were declared delinquent and were advertised for sale at a public auction, Jinkx paying P5,000 advertising costs.

  Assume that Jinkx Corporation received the following bids: Cruz, 18,000; Guzman, 15,000 shares and Ferrer, 12,000 shares. Who is the highest bidder?

  Ferrer
• Ordinary share capital


  P25 par value
• Jinkx Corporation


  • Authorized to issue 100,000 shares of ordinary share capital
• Subscription


  Sioson for 20,000 shares at P30 per share
• C. Jinkx Corporation received authorization to issue 100,000 shares of P25 par value ordinary share capital.

  • Received subscription from from Sioson for 20,000 shares at P30 per share, receiving 40% of the subscription price as down payment.

  • On due date, Sioson failed to pay the balance of the subscription price. The shares were declared delinquent and were advertised for sale at a public auction, Jinkx paying P5,000 advertising costs.

  Assume that there was no bidder, how many shares will be issued to Sioson?

  0
• Down payment


  40% of the subscription price
• Sioson failed to pay the balance of the subscription price</b>
• Delinquent shares


  Advertised for sale at a public auction
• Jinkx paid P5,000 advertising costs
• Bids received


  • Cruz, 18,000 shares
  • Guzman, 15,000 shares
  • Ferrer, 12,000 shares
• Sioson should receive 8,000 shares
• Authorized preference share capital

  100,000 shares - P2,500,000