1.

Contracts between a corporation and third persons must be made by or under the authority
of its:
a. Board of Directors c. Stockholders
b. President and CEO d. General manager
2. Which of the following does not form part of the three-fold duty of directors?
a. Duty of diligence c. Duty of Loyalty
b. Duty of dependence d. Duty of Obedience
3. The voting proportion required enabling a corporation to invest its funds in any other
corporation or business or for any purposes other than its primary purpose:
a. 2/3 vote of the board of directors and ratified by majority of the outstanding capital stock.
b. Majority vote of the board of directors and ratified by majority of the stockholders.
c. 2/3 vote of the board of directors and ratified by 2/3 of the stockholder.
d. Majority of the board of directors and ratified by 2/3 vote of the outstanding capital stock.
4. These do not form part of the outstanding capital stock:
a. Bonus shares c. Founders’ shares
b. Treasury Shares d. Redeemable Shares
5. Three of the following corporations are not authorized to issue no-par-value shares of stock.
Which one is the exemption?
a. Educational Institution c. Insurance Companies
b. Trust Companies d. Public Utilities
6. Cash dividend as distinguished from stock dividends.
a. It increases legal capital
b. Does not involve any disbursement
c. It is declared on by the Board of Directors
d. It is still part of the corporate asset
7. The difference between corporation and partnerships is that corporations:
a. The liability extends up to private properties.
b. There is no dissolution in case of death, withdrawal or resignation of an owner
c. The interest and ownership is transferable only if the other owners consent
d. It is created by the mere consent of the owners
8. In which of the following case will the doctrine of the separate corporate personality apply?
a. When used as a cloak to cover fraud, illegality or it results injustice.
b. To defeat public convenience, justify wrong, defend crime.
c. Where two corporations are made to appear as one and used as a device to defeat the
ends of law or as a shield to confuse legitimate issues.
d. Where two corporations have interlocking directors.
9. When a corporation is used to defeat public convenience, justify wrong, protect fraud, or
defend crime or made as a shield to confuse the legitimate issues or where a corporation is a
mere alter ego or business conduit of a person, this doctrine applies
a. Doctrine of business opportunity
b. Trust fund doctrine
c. De facto doctrine
d. Doctrine of piercing the veil of corporate fiction
10. In no case shall the total yearly compensation of the directors, exceed:
a. 10% of the net income before income tax during the succeeding year.
b. 10% of the net income before income tax during the preceding year.
c. 10% of the net income after income tax during the preceding year.
d. 10% of the net income before income tax during the current year.