True or False Instruction: Write "T" if the statement is correct and "F" if incorrect. 1. A stock corporation is a public corporation organized for profit. 2. When there is one class of stock issued by a corporation it is always understood to be preference shares. 3. A par value share has a nominal value stated on the face of the share certificate. 4. When a share is issued below its par value, the share is said to be "watered share". 5. The memorandum entry and journal entry are the two methods of accounting for share capital transactions. 6. Memorandum differs from journal entry method as far as authorization and ssuance of certificate are concerned. 7. Subscription is the binding agreement or a contract whereby an investor agrees to acquire a certain number of unissued share which may be paid in full or in an installment basis. 8. When the share is sold at more than the par value, the difference is "share premium", which is then a credit. 9. The highest bidder is a person who is willing to pay the unpaid balance of the delinquent subscription plus accrued interest with the "least" number of shares. 10. When a subscriber failed to pay his subscription balance after lawful calls and notices have been sent to him, all shares covered in the said subscription will be considered "delinquent". 11. When a corporation is authorized to issue ordinary and preference shares, a proper distinction of these share should be made from the authorization up to the issuance of share certificate. Multiple Choice Instruction: Encircle the letter of the corresponding correct answer. 1. Share certificates are issued to subscribers upon- full payment of subscription c. authorization date of subscription d. partial payment of subscription 2. The Share Premium Account is recorded as a credit when a. shares are sold higher than par value c. shares are sold at par value b. share are sold less than par value none of these 3. If share capital is issued for tangible or intangible property, the value of share capital is equal to the following value in order of priority: fair market value of the property receivedc. par value of the share capital b. fair market value of the capital issued issued d. all of the above priority 4. Organization cost when incurred during the organizational stage shall be charged to- a. Organization Expense b. Corporate Income c. Accumulated Profits (Losses) d. all of the above be at - 5. When shares are subscribed at par value, the debit to Subscription Receivable should a. subscription price b. par value c. fair market value d. all of the above 6. Under memo entry and journal entry methods of recording share capital transactions, both differ in the recording of: a. authorization and issuance of certificate b. subscription and issuance of certificate LP collection and subscription authorization and subscription 7. The share is considered "watered share" when- a. assets are overvalued - C. assets are not affected b. assets are understated none of these
