SEMI-FINALS REVIEW: Corporation - Nature And Formation | Accounting For Corporation Flashcards
It is not in reality a natural person but the law treats it as if it was because like a person, it can acquire and sell its own properties, enter into contract, incur liabilities, can sue and can be sued to court as an individual entity separate and distinct from the owners.
Corporation
It is the biggest and most complicated form of business organization because the so many reportorial requirements.
Corporation
It is formed by any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number.
Corporation
The first to organize the corporation and originally sign the Articles of Incorporation are called __________.
Incorporators
They must be natural persons (not artificial) in a corporation.
Incorporators
It exists because of the operation of law.
Corporation
It is known as the Revised Corporation Code of 2019.
Republic Act No. 11232
This means that a corporation as an “artificial person” has a legal personality, separate and distinct from its shareholders.
Separate Legal Entity
The ownership of a corporation is divided into units called “shares” which can be transferred from one person to another without the consent of other shareholders.
Transferable Unit of Ownership
This means that the shareholders are liable only of the corporation’s debts on the extent of their capital contributions.
Limited Liability of Shareholders
This means that a corporation has the capacity for continued existen ce because
Continuity of Existence
because there will be hundreds if not thousands of shareholders, it will be difficult for each one of them to partake in managing the business. Thus, they elect among themselves to form a _______.
Governing Body
It can only be dissolved with the consent of the state.
Corporation
Enumerate characteristics of a Corporation:
- Separate Legal Entity
- Transferable Unit of Ownership
- Limited Liability of Shareholders
- Continuity of Existence
- Governing Body
The corporation law provides that the number of board of directors be not less than ____ but not more than _______.
five; fifteen
Enumerate classification of Corporation:
- AS TO PURPOSE
- AS TO LAW OF CREATION
- AS TO MEMBERSHIP HOLDINGS
- AS TO ADMISSION OF SHAREHOLDERS
- AS TO OTHER PURPOSE
Enumerate the Classification of Corporation AS TO PURPOSE:
- Public Corporation
- Private Corporation
- Quasi-Public Corporation
It is one that is formed or organized to govern a portion a portion of the state. Examples are barangays, municipalities, cities and provinces.
Public Corporation
It is one that is formed for some private purpose, benefit, aim or end.
Private Corporation
It is a private corporation which is given a franchise to perform public duties but is organized for profits like bus and airlines, light and power, telephone companies or government-owned and controlled corporation.
Quasi-Public Corporation
Enumerate the Classification of Corporation AS TO LAW OF CREATION:
- Domestic Corporation
- Foreign Corporation
It is one that is organized under the Philippine laws,
Domestic Corporation
It is one that is organized under any law other than the Philippines.
Foreign Corporation
Enumerate the Classification of Corporations AS TO ADMISSION OF SHAREHOLDERS:
- Open Corporation
- Closely-Held Corporation
Enumerate the Classification of Corporation AS TO MEMBERSHIP HOLDINGS:
- Stock Corporation
- Non-Stock Corporation
It is a private corporation organized for profit. It is divided into share of stock and is authorized to distribute corporate profits on the basis of shares held.
Stock Corporation
It is a private corporation organized “not for profit.” If by incident it generates profits, such profits should be spent to continue attaining the objectives of its creation. Examples are civic, religious, social, charitable institutions, etc.
Non-Stock Corporation
It is one in which any person is welcomed to become a shareholder.
Open Corporation
It is one in which ownership is limited to selected persons or members of the family.
Closely-Held Corporation
Enumerate Classification of Corporation AS TO OTHER PURPOSE:
- Ecclesiastical Corporation
- Lay Corporation
It is one which is organized for religious purposes.
Ecclesiastical Corporation
It is one which is organized for a purpose other than religious purposes.
Lay Corporation
Enumerate the Components of Corporation:
- Corporators
- Incorporators
- Shareholders
- Members
- Promoters
- Board of Directors
- Subscribers
They are those who composed the corporation whether as shareholders or members. Hence, they include incorporators, shareholders or members.
Corporators
They are those who originally formed the corporation who executed and signed the Articles of Incorporation. They must be natural persons as distinguished from artificial persons.
Incorporators
They are owners of stock in a corporation. They may also be natural persons or artificial persons.
Shareholders
They are corporators of a non-stock corporation.
Members
They are the one who undertake to form a group of persons interested in organizing a corporation. They procure subscriptions or capital for the corporation.
Promoters
A governing body formed out of the shareholders.
Board of Directors
This acts as the policy-making body of the corporation.
Board of Directors
This is composed of not less than five (5) but not more than eleven (11) shareholders or members duly elected from among themselves.
Board of Directors
This is headed by the Chairman of the Board who is considered to be the most powerful and influential person in the corporation.
Board of Directors
They are natural or artificial persons who have agreed to buy original and unissued stocks of the corporation.
Subscribers
Each incorporator of a stock corporation must own or be a subscriber to at least_______ share capital stock.
one (1)
The formation of a corporation usually constitutes three (3) basic stages:
- Organization Stage
- Incorporation Stage
- Commencement Stage
This is the stage where persons who do the preliminary arrangements made by the incorporators will come in. They will set-up a tentative working organization and procure subscriptions and capital for the corporation.
Organization Stage
_________ of Revised Corporation Code states that “Stock Corporation” shall not be required to have a minimum capital stock except as otherwise specifically provided by special law.
Section 12
The penalties for the unauthorized use of corporate name shall be a fine ranging from ___________________ to _______________________.
Ten Thousand Pesos (P10,000); Two Hundred Thousand (P200,000)
___________ of the Revised Corporation Code states that a “Corporation shall have perpetual existence unless its Article of Incorporation provides otherwise”. This means that a corporation has an unending life of existence.
Section 11
A ________ shall have a period of two (2) years to resume operations and comply with all the requirement that the commission shall prescribe.
Delinquent Corporation
If a corporation does not formally organize and commence its business within ______ years from the date of its incorporation, its certificate of incorporation shall be deemed revoke as of the day following the end for the ______ year period.
five (5)
If a corporation has commenced its business but subsequently becomes Inoperative for a period of at least ______ consecutive years, the Commission may after due notice and hearing, piace the corporation under delinquent status.
five (5)
This may be amended by a majority vote of the Board of Directors or Trustees and the vote or written assent of the stockholders representing at least two-third (2/3) of the outstanding capital stock.
Articles of Incorporation
This refer to the “rules and regulations adopted by the corporation administering its Internal government”.
By-laws
Enumerate Corporate Records:
- Minutes Book
- Stock and Transfer Book
- Subscription Book
- Stock Certificate Book
The person who is given the authority by an incorporator/stockholder to attend meetings on his behalf is called _____.
Proxy
These are expenditures incurred while in the process of organizing a corporation.
Organization Cost
Ownership in a stock corporation is represented by its share capital which is divided into units called “______”.
shares
A shareholder’s ownership in the corporation is determined by________________________________.
the number of shares he owns
This certificate can only be issued to the individual shareholders who have fully paid his subscription.
“Share (Stock) Certificate”
Ownership is evidenced by a document called __________________.
“Share (Stock) Certificate”.
This certificate is signed by the President or Vice-President of the corporation, counter signed by the Secretary and sealed with the seal of the corporation.
Share Stock Certificate
The minutes of all meetings of shareholders or members and that of Board of Directors or Board of Trustees are recorded by the Corporate Secretary in this book.
Minutes Book
This book principally records the stock isuances and cancellations.
Stock and Transfer Book
Enumerate the Books in Stock and Transfer Books:
- Subscriber’s Ledger
- Shareholder’s Journal
- Shareholder’s Ledger
this is actually a subsidiary ledger for the controlling account, subscription Receivable in the General Ledger.
Subscriber’s Ledger
This shows the list of shareholders with the corresponding share certificate number in numerical sequence and shares issued to them including share certificates that were cancelled.
Shareholder’s Journal
This is a subsidiary ledger for Share Capital account in the General Ledger. The total number of shares indicated in the shareholder’s Journal and the Share Capital account in the General Ledger.
Shareholder’s Ledger
It is a book of printed blank subscription.
Subscription Book
It is a book of printed blank certificate of stock.
Stock Certificate Book
It is that portion of the paid-in capital arising from issuance of share capital which must remain untouched and unimpaired in protection to corporate creditors and cannot be returned to shareholders in any form during the Ifetime of the corporation, except when a liquidation happens and only after the debts have been paid.
Legal Capital of a Corporation
Legal capital is the aggregate par value shares of all issued and subscribed shares.
Par Value Shares
It is the total consideration received by its corporation for the issuance or its share to the shareholders including the excess of issue price over the stated value.
No Par Value Share
It is a legal principle that prohibits a private corporation to distribute its legal capital to the shareholders for the protection of corporate creditors during the lifetime of a corporation.
Trust Fund Doctrine
a corporation can declare and pay dividends to the shareholders out of its “____” or “_________________________________________”
free; unappropriated accumulated profits (losses)
It is defined as “residual interest of the owners in the assets of the corporation as a business entity, measured by the excess of assets over liabilities”, in the simplest language.
Shareholders’ Equity
It refers to the capital section of a corporation.
Shareholders’ Equity
Enumerate the Three sections that comprises the Statement of Financial Position under corporate form of business:
- Assets
- Liabilities
- Shareholders’ Equity
