Multiple Choice. Choose the correct answer to the questions.

1. What is the primary disadvantage of both a sole proprietorship and a partnership as compared to a corporation?

a. No access to capital

b. Taxing complications

c. Unlimited liability

d. Ease of start-up

2. When organizing a corporation, the incorporators submit articles of incorporation to

a. Department of Finance

b. Securities and Exchange Commission

c. Department of Trade and Industry

d. Board of Investments

3. Shares of First United Leasing Corporation stock cannot be purchased in any stock exchange or by just any individual. This means that the First United Leasing Corporation is a(n)

a. Partnership.

b. Open corporation

c. Family corporation

d. Close corporation

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 choices given.

5. Choose the situation which illustrates the minimum requirement of the law to corporate

formation:

Authorized Capital	Subscribed Capital	Paid-in Capital
a. P100,000	P25,000	P5,000
b. P100,000	5,000	5,000
c. P 50,000	12,500	3,125
d. P 60,000	15,000	5,000

6. 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 shares.

7. The arbitrary value assigned to a share of stock is called

a. Par value.

b. Market value.

c. Book value.

d. Liquidation value.

8. The shareholders or members mentioned in the Articles of Incorporation originally forming and composing the corporation and who are signatories thereof are called

a. Corporators.

b. Incorporators.

c. Promoters.

d. Subscribers.

9. Five persons decided to organize a corporation. Which of the following situation illustrates best minimum requirement of the law to capital formation?

Authorized Capital	Subscribed Capital	Paid-in Capital
a. P100,000	P20,000	P5,000
b. P100,000	25,000	5,000
c. P100,000	25,000	6,250
d. P100,000	30,000	6,000

10. No par value shares cannot be issued

a. For less than P500.

b. With preference as to assets or as to dividends.

c. Without being fully paid

d. By banks, trust companies, insurance companies, public utilities, and building and loan associations.