INTERNATIONAL SCHOOL OF ASIA AND THE PACIFIC

Alimannao Hills, Peñablanca, Cagayan 3502

C OLLEGE OF B USINESS EDUCATION

ACCOUNTANCY DEPARTMENT

Subject Code: MOCKBOARDS

Subject Title: REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS
Term: PRELIMS
Semester: SECOND School Year: 2018-2019

Name:___________________________________________ Year and Section:____________________

Proctor:__________________________________________ Score:_____________________________

I. MULTIPLE CHOICE
DIRECTIONS: Select the best answer for each of the following questions. Mark/Write only one answer
for each item on the answer sheet provided. Strictly NO ERASURES ALLOWED. Erasures will render your
examination answer sheet INVALID GOODLUCK!

1. The buyer acquires a real right to the fruits of the thing sold.
a. From the time the obligation to deliver the thing arises
b. From the perfection of the contract of sale
c. From the delivery thereof
d. From payment of the price

2. A buyer may sue the seller for breach of warranty against hidden defects of things
a. Within 40 days from delivery of the thing sold
b. Within 6 months from delivery of the thing sold
c. Within 1 year from delivery of the things sold
d. Within 4 years from discovery of the fraud

3. D is indebted to C in the amount of P200,000 and delivers to C his diamond ring by way of pledge. If D
sells the same diamond ring to T, when will T acquire ownership of the same?
a. From the time the sale is perfected between D and T
b. From the time T pays the price to D
c. From the time C consents to the sale between D and T
d. From the time T obtains actual possession of the diamond ring

4. In a partnership, the partners share in the profits

a. Equally c. According to the contract
b. According to capital contribution d. Justly and equitably

5. This kind of agent merely makes the principal and the third person meet and when they arrive at an
agreement or contract becomes entitled to compensation.
a. Broker c. Factor
b. Commission agent d. Attorney at law

6. The following are advantages of no-par value share of stock. Which is the exception?
a. No-par value shares allow flexibility in price.
b. The stockholders of no-par value shares are relieved of personal liability for unpaid stock
subscription
c. It allows the issue of stocks in exchange of property.
d. No-par value shares afford a possible remedy of relief from the evil of over-capitalization and
stock watering.

7. C appointed S to sell the former’s car for P200,000. S sold the car to P for P200,000 but S acted in her
own name. After delivery, P inspected the car and she found hidden defects in the car. Can P file an
action against C even when S acted in her own name?
a. No, under “caveat emptor” let the buyer beware.
b. Yes, because this is a contract involving property belonging to the principal.
c. No, because S acted in her own name not of the principal.
d. Yes, because the contract of sale is already perfected.
8. A bill of exchange to which no document is attached when presentment for payment or acceptance is
made.
a. Trade acceptance c. Clean bill of exchange
b. Bank acceptance d. Documentary bill of exchange

9. The distinction between a proxy and a voting trust is that in a voting trust:
a. The trustee had no legal title to the shares of the transferring stockholder.
b. Unless coupled with interest, is revocable at any time.
c. Is not limited to any particular meeting.
d. Stock certificate is not cancelled.

10.A and B entered into a universal partnership of all present property. The common property of the
partnership shall be
a. All the properties which belonged to each of the partners at the time of the constitution of the
partnership
b. All the properties which shall belong to each of the partners after the constitution of the
partnership
c. All the properties which belonged to each of the partners at the time of the
constitution of the partnership as well as the profits which they may acquire
therewith
d. All the properties which belonged to each of the partners at the time of the constitution of the
partnership as well as the properties which each may acquire thereafter

11.P appointed A his agent for the purpose of selling his car for P600,000 with 10% commission. A sold the
same car to T for P800,000. How much should A pay to P?
a. P600,000 only
b. P540,000 or minus already the 10% commission
c. P800,000
d. P720,000 or minus already the 10% commission

12.Which of the following instruments is negotiable?

a. “Good to Jose dela Paz or order, P20,000” (Sgd. Pedro Cura)
b. “I hereby authorize you to pay Jose dela Paz or order, P20,000” (Sgd. Pedro Cura)
c. “I promise to pay Jose dela Paz or order P20,000 worth in sugar.” (Sgd. Pedro Cura)
d. “I promise to pay Jose dela Paz or order P20,000 on May 23.”

13.Statement 1. Where the business of the partnership is in imminent danger of being lost, an industrial
partner who refuses to give an additional contribution agreed upon can be compelled to sell his interests to
the others.

Statement 2. A partner appointed as manager in the Articles of Partnership can be removed with or
without cause.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true, but Statement 2 is false
d. Statement 1 is false, but Statement 2 is true

14.Stock corporations are prohibited from retaining surplus profits in excess of one hundred percent of their
paid-in capital stock in this case:
a. When justified, by definite corporate expansion projects or programs approved by the board
directors
b. When there is pension plan as agreed in the Collective Bargaining Agreement
c. When the corporations is prohibited under any loan agreement with any financial institution or
creditor, whether local or foreign, from declaring dividends without its consent
d. When it can be clearly shown that such retention is necessary under special circumstances
obtaining in the corporation, such as providing preserves for probable contingencies

15.The following are the rights of an unpaid seller, except:

a. A right of lien over the thing sold while he is still in possession
b. In case of insolvency on the part of the buyer, the right of stoppage in transit
c. Right to resell the things sold
d. Right to interest on the price of the sale
16.A, B and C borrowed “en solidum” from X, Y and Z, P900,000 payable on December 15, 2008. On August
19, 2007, A paid X the whole amount of P900,000. If co-debtor B reimburses A on July 20, 2009, how
much should he pay him?
a. Nothing, because the premature payment extinguished his liability for reimbursement
b. P300,000 only because the payment of A is unauthorized
c. P300,000 with interest from August 19, 2007 to July 20, 2009
d. P300,000 with interest from December 15, 2008 to July 20, 2009

17.The voting requirement needed in declaring cash or property dividend –

a. Majority vote of the Board of Directors
b. Majority vote of the Board of Directors plus the vote of a majority of the outstanding shares
c. Majority vote of the Board of Directors plus the vote of 2/3 of the outstanding shares
d. 2/3 votes of the directors plus a majority of the outstanding shares

18.A, B and C are partners. A contributed his services only, B P20,000 and C P10,000. The partnership was
liquidated. After payment of the partnership obligation, only P9,000 worth of assets remained. The share
of A will be –
a. P3,000 c. Equal to the share of C
b. Equal to the share of B d. Nothing

19.The following are instances of pledge created by operation of law, except:

a. Hotel keeper retains the things brought into the hotel by the guest who cannot pay his hotel
bills
b. An agent retains in pledge the thing which is the object of the agency regarding his
commission
c. A mechanic retains the car he repaired until he is paid
d. A depository retains the thing deposited until he is paid the charges due him

20.S and B agreed on the sale of a four hectare property at Macapagal Boulevard for the price of P75,000 per
square meter on condition that if the price is not paid on a particular date, the sale will be considered
automatically cancelled. On the particular date agreed upon, B did not pay S, but B never asked for a
judicial cancellation nor made a notarial act of rescission. In this case –
a. The sale is cancelled as per agreement.
b. S can validly refuse any subsequent offer to pay by B.
c. B can still pay S the price.
d. B cannot anymore pay the price simply because the sale is cancelled due to his failure to pay on
the stipulated date.

21.On December 15, 2006, S offered to sell to B his house and lost for P5,000,000. B requested S to give him
60 days within which to raise the P5,000,000. On February 5, 2007, before the expiration of the 60 day
period, S informed B that he has raised the price to P7,000,000. Can B, under the circumstances, compel
S to accept P5,000,000 as payment for the house and lot?
a. No, because as between S and B, there is as yet no perfected sale.
b. Yes, because it was S who made the offer and B is just accepting the same.
c. No, because in a contract of sale S has the exclusive right to fix the price to which B can only
concur
d. Yes, because he impliedly committed himself to P5,000 in not rejecting the request of 60 days
to raise the money

22.Which of these is not a special form of payment?

a. Application of payment c. Cession en pago
b. Dacion en pago d. Tender of payment & consignation

23.A contract as a rule must be in writing to be valid.

A taxpayer is not entitled to interest on the overpayment of tax subject of a refund because an obligation
derived from law is not presumed.
a. Both statements are true
b. Both are false
c. First is false, second is true
d. Second is false, first is true

24.In which of these cases does the law not allow the recovery of deficiency judgment?
 a. In a sale of personal property on the installment basis should the buyer fail to pay
two or more installments after foreclosure of the chattel mortgage
b. In a contract of real estate mortgage
c. In a contract of antichresis
d. In a contract of chattel mortgage

25.A purchased on installment from B a house and lot. After a year of installment payment, A died. B refuses
to accept the monthly installment being tendered by his heirs contending that upon the death of their
father with whom he has a contract, the contract automatically terminated or cancelled. B is:
a. Wrong for right acquired in virtue of an obligation is transmissible
b. Wrong for the right to continue the payment is personal only to A
c. Correct for the contract is between him and A only
d. Correct because the parties did not agree on the transmissibility of the right

26.The by-laws may provide that the holders of a majority of the outstanding capital stock may elect all
members of the board of directors.

That it may also provide that no officer of the corporation shall be required to be a stockholder.
a. Both statements are true c. First is false, second is true
b. Both are false d. First is true, second is false

27.A subscribed to 1,000 shares of stock to X Corporation. She paid 25% of the said subscription. During the
stockholder meeting, can A vote all her subscribed shares?
a. No, because the subscription has not yet been fully paid
b. No, because A’s shares has become delinquent which cannot be voted.
c. Yes, as to the paid percentage of subscription
d. Yes, because unpaid shares can be voted

28.D and C agreed that D shall deliver to C ten kilos of marijuana instead of paying D’s loan amounting to P1
million. Therefore:
a. D’s obligation is extinguished
b. D must deliver 10 kilos of marijuana
c. D must pay the 1 million.
d. D may choose between the two obligations.

29.A) Obligations between husband and wife, people’s obligation to pay taxes, obligation of the employer to
pay the salaries and benefits of their employees, and the obligation of the winner in gambling to return his
winning to the loser are obligations derived from law.

B) Death of the victim through mistake of fact mistaken to be an aswang, hitting a bystander through
recklessness, reckless digging on his own property that triggered a landslide and fall of the residential
structure of the adjacent property owner will give rise to an obligation derived from quasi-delict.
a. Only A is correct c. Both are correct
b. Only B is correct d. Both are wrong

30.A) Dindo insured his only house with Sunog Agad Insurance Co. Dindo’s house was hit by a lightning and
was totally burned. The insurance co. is not liable because the loss of the house was due to fortuitous
event.

B) The condition not to do an impossible thing shall be considered as not having been agreed upon.
a. Only A is false c. Both are true
b. Only A is true d. Both are false

31.The insurer refuses to pay the insurance claim by the insurer on the ground that the loss was due to fire
which is a fortuitous event is:
a. Correct for no person shall be responsible for damage or injury due to fortuitous event
b. Incorrect for the very nature of the insurer is he assumed the risk of loss
c. Incorrect for his obligation is derived from contract which is the law between the parties
d. Both B and C

32.On refusal by obligor to perform a positive personal obligation (Bonus)

a. He can be compelled for it is his obligation to do so
b. He cannot be compelled for to do so would violate his constitutional right against involuntary
servitude
 c. Give rise to an action for damage in favor of the creditor or oblige
d. Both A and B

33.A) Real obligation is also known as an obligation to give

B) Delivery of money in payment of an indebtedness, delivery of the book borrowed, delivery of a car
purchased are examples of an obligation to do.
a. Only A is correct c. Both are correct
b. Only B is correct d. Both are wron
34.D borrowed from C P1,000,000 to secure the payment of which the former verbally agreed to deliver his 4
hectare agricultural land by way of antichresis and to pay 10% interest per annum. The contract of loan
and antichresis –
a. Are both valid
b. Both null and void
c. The loan is valid but the antichresis is null and void
d. The contract of antichresis is valid, but the loan is null and void

35.Which of these is not an essential requisite common to both pledge and mortgage?
a. That the pledge or mortgage be constituted to secure the fulfillment of a principal obligation
b. That the pledgor or mortgagor be the principal debtor
c. That the pledgor or mortgagor has the free disposal of the properties
d. That it is the essence of the pledge or mortgage that if the obligation is not paid the things in
which the pledge or mortgage consist may be alienated for the payment of the debt

36.Corporation governed by special laws aside from the requirements specified under the corporation laws. In
order that their Articles of Incorporation may be approved or accepted, they must present before the
Securities and Exchange Commission.
A. A favorable recommendation from the Ministry of Finance
B. A copy of previous income tax return and a statement of assets, liabilities and networth.
C. A favorable recommendation of the appropriate government agency in the effect that such article or
amendment is in accordance with law.
D. An undertaking to change the name of the corporation if there is already registered with the SEC a
name similar to the name of the corporation

37.I. If the certification is obtained not by the holder but by others, the secondary parties are also discharged
as when it is obtained by the drawer even at the request of the payee or even though the drawer is also
the payee.
II. The certification of checks enables a person not well acquainted with each other to close promptly
business transactions since the holder knows that he can compel the drawee bank to cash it. It thus avoids
the delay and risks of receiving, counting, and passing from hand to hand large sums of money.
A. Only the 1st Statement is True C. Both Statements are True
B. Only the 2nd Statement is True D. Both Statements are False

38.May contribute money, property or industry to a common fund

A. Both general and limited partners C. General partners
B. Limited partners D. Capitalist partners

39.Rex, a bright young star with a golden touch and Darryl, a pastor who lectures with a melodious voice
entered into a universal partnership of all present property. The common property of the partnership shall
be:
A. All the properties which belonged to each of the partners at the time of the constitution of the partnership
B. All the properties which shall belong to each of the partners after the constitution of the partnership.
C. All the properties which belonged to each of the partners at the time of the constitution of the
partnership as well as properties which each may acquire thereafter.
D. All the properties which belonged to each of the partners at the time of the constitution of the
partnership as well as the profits which they may acquire therewith.

40.Three of the following enumerations are not authorized to issue no par value shares of stock . Which is the
exception?
A. Insurance companies C. Public utilities
B. Industrial companies D. Trust Companies

41.Which one of the following is not a requisite prescribed by law in order that a partnership may be held
liable to a third party for the acts of one of its partners?
A. The contract must be in the partnership name or of its account.
B. The partner binds the partnership by acquiescence for obligations he may have contracted in good faith.
C. The partner must act on behalf of the partnership
D. The partner must have the authority to bind the partnership.

Today is Sacrifice, Tomorrow is Paradise! Page 6 of 13

42.Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of
his share/s in three of the following corporate acts. Which is the exception?
A. In case of any amendment to the Articles of Incorporation which has the effect of changing or restricting
the rights of any stockholder or class of shares.
B. In case of merger or consolidation.
C. In case of sale, lease, exchange, transfer, mortgage, pledge, or other disposition of all or substantially
all of the corporate assets and property of the corporation.
D. In case of incurring , creating or increasing bonded indebtedness.

43.Which of the following is not a requisite to consider a person an accommodation party?

A. He must not be liable to a holder in due course.
B. He must be a party to the instrument signing as maker, drawer, acceptor or endorser.
C. He must not receive value therefore.
D. He must sign for the purpose of lending his name or credit.

44.A Capitalist partner is engaged for his own account in an operation which is of the kind of business in
which the partnership is engaged. Said partner can be:
A. Compelled to sell his interest in the partnership to the other capitalist partners.
B. Compelled to dissolve or discontinue the operation of his business.
C. Compelled to bring to the common funds of the partnership any profits accruing to him from his
transactions.
D. Denied his share in the profits of the partnership.

45.Which of the following instruments is not negotiable for the reason that the instrument is not payable at a
determinable future time?
A. “On the death of X, I promise to pay to the order of B P1,000.
(Sgd.) A”
B. “ On or before October 30, 2010, I promise to pay B or his order P 1,000.
(Sgd.) A”
C. “Sixty days after sight, I promise to pay to the order of B P 1,000.
(Sgd.) A”
D. “Ten days before the death of X, I promise to pay B or his order.
(Sgd.) A”

46.A, B and C secured a loan from X. The promissory note which evidences the obligation states: “ I promise
to pay” and signed by A, B and C. The obligation is:
A. Joint C. Divisible
B. Solidary D. Indivisible

47.The following except one are the rights of a holder in due course. Which is the exception?
A. He may enforce payment of the instrument for the full amount thereof against all parties liable thereon.
B. He may receive payment and if payment is in due course, the instrument is discharged.
C. He holds the instrument subject to the same defense as if it were non-negotiable.
D. He may sue on the instrument on his own name.

48.A limited partnership named YESTOWKEE Co. Ltd. was formed on October 25, 2010 by YES as general
partner and TOW and KEE as limited partners. In 2011, YES and TOW got married, did the marriage
dissolve or put an end to the partnership?
A. Yes, the partnership is dissolved by marriage because there is a change in equity among the partners.
B. No, because spouses can enter into a universal partnership.
C. Yes, because spouses can enter into a particular partnership on be thereof.
D. No, the marriage did not dissolve the partnership.

49.X, Y and Z were partners. X is an industrial partner. During the first year of operation, the firm received a
profit of P 60, 000. During the second year, the firm sustained a loss of P 30, 000. In the Articles of
Partnership, it was agreed that the industrial partner would get 1/3 of the profit. But would not share in
the losses. How much will X, the industrial partner get?
A. X will get only P 20, 000 which is 1/3 of the profit of the 1 st year of operation.
B. X will get only P 20, 000 in the first year and none in the second year.
C. X will get only P 10, 000 which is 1’3 of the net profit
D. X will share in the loss in the second year.

Today is Sacrifice, Tomorrow is Paradise! Page 7 of 13

50.A, B, and C, capitalist partners each contributed P 30, 000, P 20, 000 and P 10, 000, respectively and D,
the industrialist partner, contributed his services. Suppose X, a customer, is the creditor of the firm to the
amount of P 180, 000. Can he recover the P180,000?
A. X must sue the firm and get P 60, 000 from all the partners including D, the industrial partner. X. can still
recover the balance of P120, 000 from the four partners jointly.
B. X can recover from the firm P 60, 000. X can still recover the balance of P 120, 000 from the capitalist
partners only.
C. X can recover from the firm P 60, 000. X can recover the balance of P 120, 000 from any of their
partners solidarily.
D. X can recover from the firm P 60, 000 and consider the balance of P 120, 000 as loss.

51.The authorized capital stock of a corporation is P 500, 000 divided into 1, 000 shares with a par value of P
100 each. At least P 25, 000 or 250 shares of the authorized capital stock must be subscribed. The 250
shares were subscribed by 25 subscribers. To meet the minimum amount of subscription that must be
paid:
A. It is enough that 25% of the total subscription is paid, regardless of the amount paid by each individual.
B. Each and every subscriber must always pay P250 which is 25% of their individual subscription.
C. Seven of the subscribers paid P 6, 250 and the rest of the subscribers did not make any payment.
D. None of these.

52.Which of the following is not a requisite for the existence of a de facto corporation?
A. The existence of a valid statute under which a corporation with some of the purposes in question can be
formed.
B. An attempt in good faith to form a corporation according to the requirements of law.
C. The organization is not registered with Securities and Exchange Commission.
D. As user of corporate powers, there must be a transaction of business in some ways as if it were a
corporation.

53.Stock corporations are prohibited from retaining surplus profits in excess of 100% of their paid capital
stock. Three of the following enumerations are exceptions. Which does not belong to the exception?
A. Where there is pension plan as agreed in Collective Bargaining Agreement.
B. When justified by definite corporate expansion projects or programs approved by the board of directors.
C. When the corporation is prohibited under any loan agreement with any financial institution or creditor
whether local or foreign from declaring dividends without its consent.
D. When it can be clearly shown that such retention is necessary under the special circumstances obtaining
in the corporation, such as providing for probable contingencies.

54.Which of the following instrument is negotiable?

A. “Pay to B or order, P 1,000 and reimburse yourself out of my money in your hands.”
(Sgd )A (to C)
B. “ I hereby authorize you to pay P1,000 on our account to the order of X.”
(Sgd.) A
C. “ I promise to pay X or order P 1,000 on or before October 25.”
(Sgd.) A
D. “Please let the bearer have P1, 000 and place to my account and you will oblige.”
(Sgd.) A

55.Every person negotiating an instrument by delivery or by a qualified endorsement warrants the following.
Which does not belong to the warranties?
A. That the instrument is genuine in all respects what it purports to be.
B. That he has good title to it and that all prior parties has capacity to contract.
C. That the person negotiating has no liability to a third person
D. That he has no knowledge of any fact which would impair the validity of the instrument or render it
valueless.

56.Mr. Bang-ga owes Mr. Eskal P150, 000 due on August 31, 2011. Mr. Bang-ga executed a mortgage in favor
of Mr. Eskal on Mr. Bang-ga’s old yellow building which is tilting on a ravine of no return to guaranty the
obligation. On August 10, 2011, the mortgaged building was totally lost due to a strong typhoon name
“bagyong SuuS”. On August 12, 2011, Mr. Eskal demanded payment from Mr. Bang-ga. Is Mr. Eskal’s
demand valid?
A. No, the obligation is with a definite period, thus the creditor cannot demand fulfillment of the obligation as
such would be prejudicial to the rights of the debtor.

Today is Sacrifice, Tomorrow is Paradise! Page 8 of 13

 B. No, the obligation is extinguished because the obligation is lost due to a fortuitous event.
C. Yes, the debt becomes due at once because the guaranty was lost even though a fortuitous event
unless the debtor can mortgage another property that is equally satisfactory.
D. Yes, the debt becomes due at once because the tenor benefit is given solely to the creditor thereby
giving the creditor the right to demand performance even before the due date.

57.f a partner in a partnership is insolvent, the first order of preference in the distribution of his assets are:
A. Partnership creditors
B. Partners contribution to the partnership
C. Separate creditors or the debtors
D. Pro rate between the separate creditors of the debtor and the partnership creditors.

58.X. Y and Z are equal partner to ZXY Partnership. A owes the XYZ Partnership for P 9, 000. Z, a partner
collected from A P 3, 000 before X and Y received anything. Z issued a receipt on the P 3, 000, as his
share of what A owes. When X and Y collected from A, A was insolvent.
A. Partner Z shall share partners X and Y with the P 3, 000.
B. Z cannot be required to share X and Y with the P 3, 000.
C. X and Y should first exhaust all remedies to collect from A.
D. X and Y can automatically deduct from the capital contribution of Z in the partnership their respective
share in the P 3, 000.

59.Estong who has long half-gray hair falls in shaggy layers to his shoulders and Que who has a thing and
long goatee which is completely gray, are partners in a real estate (ESTONGQUE) partnership. The
partnership owns a piece of land which Bal desired to buy. Bal contacted Estong and informed him of his
desire to buy the land and Estong did not inform Que about it. Estong bought Que out of the partnership
and afterwards sold the land to Bal with a big profit.
A. The partnership is dissolved when Estong became the sole owner.
B. The sale of the land to Bal is void because it was without the knowledge of Que
C. Estong is not liable to Que for the latter’s share in the profits.
D. Estong is liable to Que for the latter’s share in the profits.

60.In the matter of management of the business affairs of the corporation, this is supreme.
A. majority of the stockholders C. Board of Directors
B. 2/3 of the stockholders D. President of the corporation

61.I. In payment for honor, the holder can refuse the payment.
II.In acceptance for honor, the holder’s consent is necessary.
A. Only the 1st Statement is True C. Both Statements are True
B. Only the 2 Statement is True
nd
D. Both Statements are False

62.I. A check must be presented for payment within a reasonable time after its negotiation
II. An ordinary bill must be presented for payment within a reasonable time after its issue
A. Only the 1st Statement is True C. Both Statements are True
B. Only the 2nd Statement is True D. Both Statements are False

63.I. The holder of a bill drawn in a set is liable to each person to whom he has indorsed a part of the bill;
and should the indorsees, in turn, indorse their respective parts of the bill, each would be liable on the part
he has himself indorsed, such part being considered a separate bill by itself.
II. Each part of a bill in set may be negotiated. But the payee is not supposed to negotiate all the parts
since the only reason for drawing the bill in parts is to obtain greater assurance that at least one part will
reach the payee or its destination safely. However, should the payee negotiate the different parts to
different persons, then he is liable on each part.
A. Only the 1st Statement is True C. Both Statements are True
B. Only the 2nd Statement is True D. Both Statements are False

64.Choose the minimum requirement of the Corporation law to corporate formation

Authorized capital Subscribed Paid In Capital
A. P 50, 000 P 20, 000 P 5, 000
B. P 50, 000 P 20, 000 P 4, 000
C. P 50, 000 P 25, 000 P 5, 000
D. P 50, 000 P 25, 000 P 6, 250

Today is Sacrifice, Tomorrow is Paradise! Page 9 of 13

65.I. When a check is accepted or certified, the drawer and indorsers are discharged from liability thereon
II. In an ordinary bill, the drawer and indorsers remain liable in spite of the acceptance.
A. Only the 1st Statement is True C. Both Statements are True
B. Only the 2nd Statement is True D. Both Statements are False

66.These are the effects of certification of checks, except

A. It is equivalent to acceptance
B. The drawer may still issue a stop payment order on the certified check.
C. The payee or holder, for all intents and purposes, becomes the depositor of the drawee bank, with
rights and duties of one in such a situation
D. It operates as an assignment of the funds of the drawer in the hands of the drawee bank

67.A person primarily liable even though he adds the word “surety” to his signature or the fact that he signed
for accommodation is known to the holder.
A. Accomodation guarantor C. Accomodation drawee
B. Accomodation drawer D. Accomodation maker

68.An instrument is considered payable on demand

A. When no time of payment is expressed.
B. When payable to order
C. When the last endorsement is in blank
D. When the last endorsement is restricted

69.A presented a bill to B, the drawee. B destroyed the bill. What can A do?
A. A may sue B for the destruction of his property.
B. A may go after the drawee for the bill
C. A may no longer collect since the bill was destroyed
D. A may consider the bill as impliedly accepted by B.

70.I. Where a check is certified by the bank on which it is drawn, the certification is equivalent to an
acceptance.
II. Where the holder of a check procures it to be accepted or certified, only the drawer is discharged from
liability thereon.
A. Only the 1st Statement is True C. Both Statements are True
B. Only the 2nd Statement is True D. Both Statements are False

71. In order that fraud may make a contract voidable

a. It may be incidental but both parties should not be in pari delicto

b. It may be serious and the parties must be in pari delicto
c. It may be incidental but should have been employed by both parties
d. It should be serious and should have not been employed by both contracting parties

72. The following are characteristics of void or inexistent contracts, except:

a. The right to set up the defense of illegality cannot be waived

b. The action or defense for the declaration of the inexistence of a contract does not prescribe
c. A void contract cannot be ratified
d. The defense of illegality of contracts is not available to third persons whose interests are not
directly affected

73. S1: A partnership is created by mere agreement of the partners while a corporation is created by
operation of law.

S2: In a partnership, juridical personality commences from the execution of the articles of the partnership;
in a corporation, from the issuance of certificate of incorporation by the Securities and Exchange
Commission.
a. True; True b. True; False c. False; False d. False; True

Today is Sacrifice, Tomorrow is Paradise! Page 10 of 13

74. The minimum capital in money or property except when immovable property or real rights thereto are
contributed, that will require the contract of partnership to be in a public instrument and be registered with
the Securities and Exchange Commission(SEC).

a. P5,000.00 b. P3,000.00 c. P3,001.00 d. P10,000.00

75. If the partnership has the minimum capital mentioned in No. 29, but the contract is not in a public
instrument or the same is not recorded with SEC, the partnership:

a. Is voidable
b. Is void
c. Still acquires juridical personality
d. Does not acquire juridical personality

76. Three of the following contracts are void. Which one is not?

a. A universal partnership of all present property between husband and wife

b. A universal partnership of profits between a man and a woman living together as husband and
wife without the benefit of marriage
c. A particular partnership between husband and wife
d. A universal partnership of profits between a private individual and a public officer

77. Partners Arnold, Ben and Charlie contributed: Arnold-P1,000,000; Ben-P2,000,000; and Charlie-
service. After exhausting the partnership assets, the creditors still have a claim for P300,000. For how
much are the partners liable to the creditors for the partnership liability?

a. Only Arnold and Ben are liable equally to the creditors being capitalists
b. Only Arnold and Ben are liable at 1/3 and 2/3, respectively
c. All of Arnold, Ben and Charlie are liable pro rata to the creditors
d. Charlie is not liable being an industrial partner who is exempt from losses

78. Armando and Betty are co-owners of a parcel of land from which they derive profits in equal sharing
being co-heirs in inheritance. Is there a partnership?

a. There is a partnership because of the equal sharing of profits

b. There is no partnership because co-ownership by itself does not establish a partnership despite
the sharing of profits
c. There is no partnership since in partnership division of profits is not always necessary among
partners
d. There is partnership they being co-owners and co-possessors

79. Normelita and Gracia are partners in NG Partnership. While Normelita was performing her duties as a
partner in the conduct of the business, he negligently caused damage to Eddie, a third person. Who shall
be liable to Eddie and in what capacity?

a. Only the partnership shall be liable it being a juridical person separate and distinct from the
partners
b. Only Normelita shall be liable for she is the only one at fault
c. Both Normelita and Gracia shall be liable solidarily to Eddie
d. Normelita, Gracia and the partnership are all liable solidarily to Eddie

80. Petalcorin is indebted for P5,000 to JDS Trading Company, a partnership managed by Dulzura to whom
Petalcorin also owes P10,000.00. The two debts which are both demandable are unsecured. Petalcorin
remits P4,500.00 to Dulzura in payment of his debt to her. Accordingly, Dulzura issues a receipt for her
own credit. To which credit should the payment be applied?

a. To Dulzura’s credit because the payment made by Petalcorin is intended for his debt to Dulzura
who issues her own receipt.
Today is Sacrifice, Tomorrow is Paradise! Page 11 of 13
 b. To both the partnership credit and Dulzura’s credit proportionately at P1,500.00 and P3,000.00,
respectively.
c. To Dulzura’s credit because its amount is greater than that of the partnership credit.
d. To the partnership credit because the managing partner should not prefer her own interest to
that of the partnership.

81. Joseph, Aris, Dex and Earl are partners in JADE Enterprises, a jewelry store, with Joseph contributing
P50,000.00; Aris, P20,000.00; and Dex, P30,000.00. Earl is an industrial partner and manages the
partnership. Based on the foregoing information, which one of the following statements is false?

a. Joseph may engage in the buying and selling of rice without the consent of the other partners
b. Earl may engage in the buying and selling of rice without the consent of the other partners
c. Earl is not liable for the losses of the partnership
d. Earl may be held liable by third persons for partnership debts with her separate property

82. MARILEN Company is owned by the following partners with their respective contributions: Mary,
P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza, P50,000.00; Edna,
P100,000.00; and Nora, P200,000. Except for Edna and Nora, all the rest are managers without any
specification as to their respective duties. Mary wants to buy goods from Excellent Company. Liza opposes.
Anna and Rose side with Mary while Irma sides with Liza.

a. The group of Mary will prevail because they constitute the majority.
b. The group of Liza will prevail because they constitute the controlling interest.
c. The group of Mary will prevail because they constitute the controlling interest.
d. Suppose Rose abstains, the group of Mary will prevail.

83. Which of the following will not cause the automatic dissolution of a general partnership?

a. Death of a capitalist partner

b. Insolvency of a capitalist partner
c. Insanity of an industrial partner
d. Civil interdiction of an industrial partner

84. A person admitted to all the rights of a limited partner who has died or has assigned his interest in the
partnership is known as

a. An ostensible partner
b. A liquidating partner
c. A substituted limited partner
d. A general-limited partner

85. What is the order of payment of liabilities of a dissolved general partnership using the code number
representing each liability?

I. Those owing to partners than for capital or for profits

II. Those owing to creditors other than partners
III. Those owing to partners in respect of profits
IV. Those owing to partners in respect of capital
a. I, II, III, IV
b. II, I, IV, III
c. II, I, III, IV
d. I, II, IV, III

86. The articles of incorporation differ from the by-laws in that the articles of incorporation are:

a. The rules of action adopted by a corporation for its internal government

b. Adopted before or after incorporation

Today is Sacrifice, Tomorrow is Paradise! Page 12 of 13

 c. A condition precedent in the acquisition by a corporation of a juridical personality
d. Approved by the stockholders if adopted after incorporation

87. A corporation acquires juridical personality

a. Upon the filing of the articles of incorporation

b. Upon the filing of the by-laws
c. Upon the issuance of the certificate of incorporation
d. Within 30 days from the receipt of the notice of the issuance of the certificate of incorporation

88. A delinquent stockholder is not entitled to the following rights, except

a. To be voted
b. To vote or be represented in the meetings of stockholders
c. To dividends
d. He is not entitled to all the rights of a stockholder

89. Every corporation incorporated under the Corporation Code has the power and capacity

a. To adopt and use a corporate seal

b. To protect debts due to the corporation
c. To protect or aid employees
d. To increase the business of the corporation

90. All of the following, except one are qualifications of a director or trustee. Which is it?

a. He must be the owner of at least 1 share of stock which shall stand in his name on the books of
the corporation
b. Majority of the directors or trustees must be residents of the Philippines
c. The number must not be less than 5 not more than 15
d. In case of a non-stock corporation, a trustee is not required to be a member of the corporation

91. S1: The removal of a director must take place in a regular meeting of the corporation or in a special
meeting called for the purpose.

S2: The election must be made through the raising of hands if requested by any voting stockholder or
member. If there is no such request, voting may be made through other means like secret ballot.
a. True; True b. True; False c. False; False d. False; True

92. These are powers which are necessary to carry into effect powers which are expressly granted, and
which must therefore be presumed to have been the intention in the grant of the franchise.

a. Express powers c. Implied powers

b. Incidental powers d. Inherent powers

93. Which of the following subscriptions does not comply with the subscription and paid-up capital
requirements at the time of incorporation?

Authorized Subscribed Paid-up

a. P1,000,000.00 P250,000.00 P62,500.00
b. 300,000.00 75,000.00 50,000.00
c. 100,000.00 100,000.00 100,000.00
d. 50,000.00 12,500.00 3,125.00

94. A corporation may acquire its own shares for a legitimate purpose provided it has unrestricted retained
earnings. In which of the following acquisitions is the requirement of unrestricted retained earnings not
imposed?

Today is Sacrifice, Tomorrow is Paradise! Page 13 of 13

 a. When the acquisition is made to eliminate fractional shares
b. When delinquent shares are acquired in a delinquency sale
c. When redeemable shares are repurchased in accordance with the terms provided in the articles
of incorporation
d. When shares are acquired from stockholders who exercise their appraisal right

95. Which of the following rights is the subscriber of shares not fully paid who is not delinquent not entitled
to?

a. Right to dividends
b. Right to vote in stockholders’ meetings
c. Right to a stock certificate
d. Right to inspection of corporate books and records

96. Fatima Corporation has a statement of capital stock in its articles of incorporation but it was stated in
the same articles that dividends are not supposed to be declared , that is , there is no distribution of
retained earnings. Fatima Corporation is:
a. Stock corporation c. Corporation by prescription
b. Non-stock corporation d. Corporation by estoppels

97. How many number of votes of the board of directors are required to change the name of a
corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board

98. In the matter of managing the business of the corporation, the exercise of corporate power and
handling of corporate properties this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the OCS of the corporation
c. Majority vote of the Board of Directors
d. The President of the corporation.

99. Which of the following is not required to be included in the Articles of Incorporation?
a. Duties of the president.
b. Name of the corporation.
c. Period of existence
d. Location of the principal office.

100. Delinquent stocks are

a. Entitled to vote in stockholders’ meeting
b. Entitled to inspect the books of the corporation
c. Entitled to dividends
d. None of the above

----- end of examination-----

“Everything you want is waiting out there for you to ask. Everything you want also wants you. But you have to
take action to get it.”

- Jack Canfield

God bless future Certified Public Accountants!

Prepared by:
MICHAEL PATRICK A. PINEDA,CPA
Instructor
Today is Sacrifice, Tomorrow is Paradise! Page 14 of 13
Checked by:
MARK JOHN D. GONZALES,CPA
Instructor/Program Coordinator

Noted by:

CB RONIE E. SUGAROL,MPBM
Dean, Business Education/School Overseer

Reviewed by:

DAN PAOLO E. RAMOS,MSHM

QA Moderator for Academics and Administration

Approved by:

PRESENITA C. AGUON,Ph.D.
Vice President for Academic Affairs

Today is Sacrifice, Tomorrow is Paradise! Page 15 of 13