Please choose A if the 1st statement only is correct; B if the 2nd statement only is correct; C if both statements are correct; D if both statements are incorrect.

3. 1st -No-Par Preference Shares can be issued by the corporation. 2nd -A no-par Preference Share may be issued at least P5.00 per share. (2 Points)

A

B

C

D

4. 1st -When an entity has 1 class, preference shares can be issued. 2nd -The sale of shares of ABC Corporation by one shareholder to another shareholder will affect the total assets and total shareholders' equity of ABC Corporation.,

A

B

C

D

5. 1st -P10-par value Ordinary Shares may be issued for services to be rendered. 2nd -The corporations are subject to greater government control and regulation than sole proprietorships and partnership.

A

B

C

D

6. 1st - Pedro, not a shareholder, donated P100,000 cash to XYZ Corporation. The donated cash will be recorded as share premium. 2nd - Jose, a shareholder of ABC Corporation, donated 1,000 ordinary shares of ABC Corporation to XYZ Corporation. The donated shares will be recorded as share premium.

A

B

C

D

7.

1st - The sum of unissued shares, outstanding shares and treasury shares is authorized shares. 2nd -When ordinary shares with par values are sold, the proceeds should be credited toOrdinary Shares account at par value and Share Premium account in excess of par value, if any,

A

B

C

D 8.

1st - Mutual agency is a disadvantage to both partnership and corporation. 2nd - The proper classification of Subscription Receivable is a shareholders' equity account.

A

B

C

D 9.

1st -In the event of corporate liquidation, shareholders whose stock is preferred as to assets are entitled to receive the par value of their shares after amounts are distributed to creditors but before the ordinary shareholders. 2nd -Per International Accounting Standards (IAS) No. 38, Organization Expense are recognized asan intangible asset when incurred and amortized over 5-year period.

A

B

C

D 10.

1st -Preference shares gives the holder certain advantages over ordinary shareholders such aspreferred as to dividends and to assets in case of liquidation. 2nd -Labor to be performed or services to be rendered to the corporationis allowed as consideration for issuance of shares .

A

B

C

D

11. 1st - Both Donated capital and Retained Earnings form share capital. 2nd - Sale of Treasury Stock below cost will increase both Total Assets and Total Shareholders' Equity of a corporation.

A

B

C

D

12. 1st - Both 2-for-1 share split and 100% share dividend will double the number of outstanding shares. 2nd - Both 2-for-1 share split and 100% share dividend will decrease the Retained Earnings account.

A

B

C

D

13. 1st - The sale of treasury stock above cost will cause to increase share capital and Total Shareholders' Equity. 2nd - The declaration of 3-for-1 share split will increase the Total Shareholders' Equity and the number of shares authorized, outstanding and treasury.

A

B

C

D 14.

1st -Change of no-par, P50 stated value ordinary shares to P80 par value ordinary shareswill cause the retained earnings account to decrease. 2nd -When the corporation acquirers its own ordinary shares from shareholders,total shareholders' equity will decrease.

A

B

C

D 15.

1st - When XYZ Corporation acquires ABC Corporation shares, Total Assets of XYZ Corporation will decrease. 2nd -When the corporation re-issues treasury stock for cash,total number of shares issued will increase.

A

B

C

D 16.

1st -6% Preference shares, P1,000 par value, 1,000 shares issued; Ordinary shares, P100 par value, 500,000 shares authorized, 100,000 shares issued; and, Subscribed Ordinary shares, P100 par value, 50,000 shares, will form part of legal capital of the corporation. 2nd - Three HeartsCorporation was issued certificate of registration on October 19, 2021. On November 9, 2021, Joel subscribed and paid for 1,000 P10-par value ordinary shares for P25,000. Joel is an incorporator, a director and a shareholder.

A

B

C

D 17.

1st -Five ordinary shares of Triple G Corporation received by Triple G Corporation will form part share premium / donated capital. 2nd -If a corporation reissued at P100 per share 100 shares of treasury stock that it had previously acquired for P140 per share and there was no balance on Share Premium - Treasury, it would debitLoss on Sale of Treasury Stock for P4,000.

A

B

C

D