Althea Flor R.

Cagakit
Business Law and Regulation

PARTNERSHIP
General Provisions
1. A ___________ exist when two or more persons bind themselves to contribute money, property,
or industry to a common fund, with the intention of dividing the profits among themselves.
a. Corporation
b. Partnership
c. Sole Proprietorship
d. Cooperative
2. It is a form of partnership wherein there is community of interests in the business and sharing of
profits and losses.
a. Corporation
b. Sole Proprietorship
c. Joint Venture
d. Cooperative
3. A group of men pursuing a learned art as a common calling in the spirit of public service.
a. Business
b. Service
c. Profession
d. Artists
Obligations of the Partners
4. Those who manage actively the business or affairs of the partnership.
a. Silent partner
b. Managing partner
c. Ostensible partner
d. Dormant partner
5. Which of the following is not a requisite prescribed by law in order that the partnership may be
held liable to a third party for the acts of one of the partners?
a. The partners bind the partnership by consenting for obligations he may have
contracted in good faith.
b. The contract must be in the name of the partnership.
c. The partner must have a Special Power of Attorney to bind the partnership.
d. The partner must act on behalf of the partnership.
6. Those who do not take active part in the business or affairs of the partnership though they share
in the profits or losses.
a. Silent partner
b. Managing partner
c. Ostensible partner
d. Dormant partner
7. Those who takes charge of the winding up or liquidation of the partnership affairs after
dissolution.
a. Ostensible partner
b. Secret partner
c. Liquidating partner
d. Dormant partner
8. A, B, and C formed a partnership. They contributed P250,000 each. They also agreed on equal
distribution of profit. After 5 years of operation however, C conveys her whole interest in the
partnership to D, without the knowledge and consent of A and B. Is the partnership dissolved?
 a. The partnership is not dissolved because the assignment made by C of his whole
interest was without the knowledge and consent of A and B.
b. The partnership was dissolved because the assignee, D automatically becomes a new
partner.
c. It is dissolved because C has ceased to be a partner because of the assignment of his
whole interest to D.
d. The partnership is not dissolved because the conveyance of a partner’s interest in the
partnership does not of itself dissolve the partnership.
9. Those who takes active part and known to the public as a partner in the partnership.
a. Secret partner
b. Liquidating partner
c. Dormant partner
d. Ostensible partner
10. Those whose connection with the partnership is not known to the public.
a. Ostensible partner
b. Secret partner
c. Liquidating partner
d. Dormant partner
Dissolution and Winding Up
11. If a partner is insolvent, the first in the order of preference in the distribution of his assets is:
a. Partnership creditors
b. Separate creditors of the partner-debtor
c. Partner’s contribution to the partnership
d. Pro-rata between the separate creditors and the partnership creditors.
12. The three final stages of a partnership are the following except:
a. Dissolution
b. Winding-up
c. Termination
d. None of the above
13. It means the dissociation by a partner, inclusive of resignation or withdrawal, from the
partnership that thereby dissolves it.
a. Dissolution
b. Retirement
c. Liquidation
d. Termination
14. A partnership is dissolved in the following instances, except:
a. Death of a partner
b. Partnership business can only be carried on at a loss.
c. Insolvency of a partner or of the partnership
d. Partnership business has become unlawful.
15. In extra-judicial liquidation, the following will wind-up the partnership, except:
a. The liquidating partner or partners as agreed upon by all of the partners.
b. The partners who have not wrongfully dissolved the partnership.
c. The legal representative of the last surviving partner.
d. The managing partner who has the controlling interest.
16. The following are the rights of a partner who has not caused dissolution wrongfully, except:
a. To have the partnership property applied to discharge the liabilities of the
partnership.
b. To have the surplus, if any, applied to pay in cash the net amount owing to the
respective partners.
 c. To be indemnified for damages caused by the partner who did not caused the
dissolution wrongfully.
d. To continue the business in the same name either by themselves or jointly with others
during the agreed term of the partnership and for that purpose may possess the
partnership property.
Limited Partnership
17. Is one formed by two or more persons having as members one or more general partners and one
or more limited partners.
a. General partnership
b. Limited partnership
c. Real partnership
d. Partnership by estoppel
18. It is also known as special partner.
a. Managing partner
b. Liquidating partner
c. Limited partner
d. General partner
19. Spouses H and W formed a limited partnership to engage in real estate business and H
contributed P500,000. Is the partnership between the spouses valid?
a. The partnership is not valid because the spouses cannot enter into a limited
partnership.
b. The partnership is valid because spouses are prohibited to enter into a universal
partnership only.
c. The partnership is valid because spouses can enter into a partnership, limited or
general, universal or particular.
d. The partnership is not valid because spouses cannot enter into any kind of partnership
for business.
20. The certificate of limited partnership shall state the following, except:
a. The name of the partnership, adding thereto the word “General”.
b. The character of the business.
c. The location of the principal place of business.
d. The name and place of residence of each general and limited partners.
21. A limited partner shall be liable as a general partner unless:
a. He takes part in the control of the business.
b. He renounces his share in profits after knowledge of the error that he was made a
general partner.
c. His surname appears in the firm name.
d. His contribution is industry.
CORPORATION
General Provisions, Definitions and Classifications
22. Is an artificial being created by operation of law, having the right of succession and the powers,
attributes and properties expressly authorized by law or incident to its existence?
a. Corporation sole
b. Corporation
c. Partnership
d. Sole proprietorship
23. The following are the characteristics of a corporation, except:
a. It is an artificial being.
b. Created by meeting of the minds.
c. It has the right of succession.
 d. It has the powers, attributes and properties expressly authorized by law or incident to
its existence.
24. It refers to any agency organized as a stock or non-stock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature, and owned by the
government directly or through its instrumentalities either wholly, or, where applicable as in the
case of stock corporations, to the extent of at least 51 per cent of its capital stock.
a. Private corporation
b. Closed corporation
c. Government-owned or controlled corporation
d. Local government units
25. The factors for the application of the doctrine of piercing the corporate veil are the following,
except:
a. Stock ownership by one or common ownership of both corporations
b. Identity of directors and officers
c. The manner of keeping corporate books and records
d. Identity of corporate president
26. The continuation of a corporation’s legal status despite changes in the ownership or management.
a. Succession
b. Inheritance
c. Dissolution
d. Liquidation
Incorporation and Organization of Private Corporations
27. Corporations which have capital stock divided into shares and are authorized to distribute to the
holders of such shares dividends or allotments of the surplus profits on the basis of the shares
held.
a. Non-stock corporation
b. Stock corporation
c. Corporation aggregate
d. Corporation by prescription
28. Is one where no part of its income is distributable as dividends to its members, trustees, or
officers?
a. Non-stock corporation
b. Stock corporation
c. Corporation aggregate
d. Corporation by prescription
29. A private corporation which has accepted from the State the grant of franchise or contract
involving the performance of public duties but which are organized for profit.
a. Government-owned or controlled corporation
b. Quasi-public corporation
c. De jure corporation
d. De facto corporation
30. A corporation created in strict or substantial conformity with the mandatory statutory
requirements for incorporation and the right of which to exist as a corporation cannot be
successfully attacked or questioned by any party even in a direct proceeding for that purpose by
the State.
a. Government-owned or controlled corporation
b. Quasi-public corporation
c. De jure corporation
d. De facto corporation
 31. All persons who assume to act as a corporation knowing it to be without authority to do so shall
be liable as general partners for all debts, liabilities and damages incurred or arising as a result
thereof.
a. Foreign corporation
b. Domestic corporation
c. Corporation by prescription
d. Corporation by estoppel
Board of Directors/Trustees and Officers
32. It is a person who, apart from shareholdings and fees received from the corporation, is
independent of management and free from any business or other relationship which could, or
could reasonably be perceived to materially interfere with the exercise of independent judgment
in carrying out the responsibilities as a director.
a. Dependent director
b. Independent director
c. Authorized director
d. Outstanding director
33. Corporate directors are personally liable if found guilty of gross negligence or bad faith in
directing the affairs of the corporation, which results in damage or injury to the corporation, its
stockholders or members, and other persons.
a. Doctrine of self-dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund
34. A contract of the corporation with one or more of its directors or trustees or officers.
a. Doctrine of self-dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund
Powers of Corporations
35. Is an action brought by a stockholder on behalf of the corporation to enforce corporate rights
against the corporation’s directors, officers or other insiders?
a. Individual suit
b. Corporate suit
c. Derivative suit
d. Representative suit
36. It means that a stockholder who dissented and voted against the proposed corporate action, may
choose to get out of the corporation by demanding payment of the fair market value of his shares.
a. Pre-emptive right
b. Appraisal right
c. Stockholders right
d. Right to liquidation
37. Subscriptions to the capital stock of a corporation constitute a fund to which the creditors have a
right to look for the satisfaction of their claims.
a. Trust fund doctrine
b. Doctrine of corporate opportunity
c. Doctrine of piercing the veil of corporate fiction
d. Entity doctrine
38. The distribution of corporate capital happens only in three instances, except:
a. Amendment of the articles of incorporation to reduce the authorized capital stock
b. Purchase of redeemable shares by the corporation, regardless of the existence of
unrestricted retained earnings.
 c. Dissolution and eventual liquidation of the corporation.
d. Amendment of the by-laws to reduce the authorized capital stock.
39. The following are the requirements of increase or decrease of authorized capital stock, except:
a. No decrease of the capital stock shall be approved if its effect shall prejudice the
rights of corporate creditors.
b. Approval by a majority vote of the board of directors.
c. Ratification by the stockholders holding at least 2/3 of the outstanding capital stock.
d. Approval thereof by the DTI.
By Laws
40. The rules and regulations or private laws enacted by the corporation to regulate, govern and
control its own actions, affairs and concerns and its stockholders or members and directors and
officers with relation thereto and among themselves in their relation to it.
a. By-laws
b. Articles of Incorporation
c. Resolution
d. Rules, regulation and discipline
41. It is a condition precedent in the acquisition of corporate existence.
a. By-laws
b. Articles of incorporation
c. Shares of stock
d. Rules regulation and discipline
42. A private corporation may provide the following in its by-laws:
a. The modes by which a stockholder, member, director, or trustee may attend meetings
and cast their votes.
b. The form for proxies of stockholders and members and the manner of voting them.
c. The manner of election or appointment and the term of office of all officers other
than directors or trustees.
d. All of the above.
Meetings
43. The requirements for a valid meeting are the following, except:
a. It must be held at the principal place of business only.
b. It must be held at the stated date and at the appointed time.
c. It must be called by the proper person.
d. The person or persons designated in the by-laws have authority to call stockholders
or members meeting.
44. The requirements for board meeting are the following, except:
a. Meeting of the directors or trustees duly assembled as a Board.
b. Presence of the required quorum.
c. Decision of the majority of all the members of the board only.
d. Meeting at the place, time, and manner provided in the by-laws.
45. The requirements for a valid proxy are the following, except:
a. It shall be in writing.
b. It shall be signed by the stockholder or member.
c. It shall be filed before the scheduled meeting with the corporate treasurer.
d. Unless otherwise provided in the proxy, it shall be valid only for the meeting which it
was intended.
Stocks and Stockholders
46. Is an action brought by minority shareholders in the name of the corporation to redress wrongs
committed against it for which the directors refuse to sue?
a. Individual suit
b. Representative suit
 c. Class suit
d. Derivative suit
47. The following are the requisites of a derivative suit, except:
a. The party bringing suit should be a shareholder as of the time of the act or transaction
complained of, the number of his shares not being material.
b. He has tried to exhaust intra-corporate remedies, i.e., has made a demand on the
board of directors for the appropriate relief but the latter has failed or refused to heed
his plea.
c. The cause of action actually devolves on the corporation, the wrongdoing or harm
having been, or being caused to the corporation and not to the particular stockholder
bringing the suit.
d. None of the above.
48. Where a stockholder or member is denied the right of inspection, his suit would be, ________
because the wrong is done to him personally and not to the other stockholders or the corporation.
a. Individual
b. Representative
c. Class
d. Derivative
49. Where the wrong is done to a group of stockholders, as where preferred stockholders’ rights are
violated, a class suit will be proper for the protection of all stockholders belonging to the same
group.
a. Individual suit
b. Representative suit
c. Corporate suit
d. Derivative suit
50. Unit of interest in a corporation.
a. Treasury stock
b. Shares of stock
c. Certificate of stock
d. Par value stock
Corporation Books and Records
51. The books and records required to be kept by the corporation are the following, except:
a. Minutes of meetings of stockholders or members.
b. Minutes of all meetings of directors or trustees.
c. Stock and transfer book, in case of stock corporations.
d. Log Book
52. The following are the limitations on the right of inspection by a stockholder, except:
a. The right must be exercised during reasonable hours on business days.
b. The person demanding the right has not improperly used any information obtained
through any previous examination of the books and records of the corporation.
c. The demand is made in good faith or for legitimate purpose.
d. The right can be exercised regardless of purpose.
53. I. Corporate records, regardless of the form in which they are stored, shall be open to inspection
by any director, trustee, stockholder or member of the corporation in person or by a representative
at reasonable hours on business days.
II. The inspecting or reproducing party shall remain bound by confidentiality rules under
prevailing laws.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
 54. Stock corporations must also keep a stock and transfer book, which shall contain:
a. A record of all stocks in the names of the stockholders alphabetically arranged.
b. The installments paid and unpaid on all stocks for which subscription has been made,
and the date of payment of any installment.
c. A statement of every alienation, sale or transfer of stock made, the date thereof, by
and to whom made.
d. All of the above.
Merger and Consolidation
55. I. Two or more corporations may merge into a single corporation which shall be one of the
constituent corporations.
II. Two or more corporations may consolidate into a new single corporation which shall be
consolidated corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
56. It is a union whereby one or more existing corporations are absorbed by another corporation that
survives and continues the combined business?
a. Merger
b. Consolidation
c. Acquisition
d. Business combination
57. It is the union of two or more existing entities to form a new entity called the consolidated
corporation?
a. Merger
b. Consolidated
c. Acquisition
d. Business combination
Appraisal Right
58. It means that a stockholder who dissented and voted against the proposed corporate action, may
choose to get out of the corporation by demanding payment of the fair market value of his shares.
a. Pre-emptive right
b. Appraisal right
c. Voting right
d. Management right
59. The following are the instances of appraisal right, except:
a. In case of any amendment of the by-laws.
b. In case of investing of corporate funds in another corporation or business.
c. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all
or substantially all of the corporate property and assets.
d. In case of merger or consolidation.
60. The following are instances where a dissenting stockholder who demands payment of his shares
is no longer allowed to withdraw from his decision, except:
a. The corporation consents to the withdrawal.
b. The proposed corporate action is approved by SEC where its approval is necessary.
c. The proposed corporate action is abandoned or rescinded by the corporation.
d. The SEC determines that such stockholder is not entitled to appraisal right.
61. I. The corporation shall bear the costs of appraisal, as a rule.
II. Clearly, the right of appraisal may be exercised when there is a minor change in the charter or
articles of incorporation substantially prejudicing the rights of the stockholders.
a. Only I is true
 b. Only II is true
c. Both are true
d. Both are false
Non-stock Corporations
62. Is one where no part of its income is distributable as dividends to its members, trustees, or
officers?
a. Non-stock corporation
b. Stock corporation
c. Close corporation
d. Corporation sole
63. I. No person shall be elected as trustee unless he is a member of the corporation.
II. Unless otherwise provided in the articles of incorporation or the by-laws, officers of a non-
stock corporation may be directly elected by the members.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
64. I. Membership shall be terminated in the manner and for the causes provided in the articles of
incorporation or the by-laws.
II. Termination of membership shall have the effect of extinguishing all rights of a member in the
corporation or in its property, unless otherwise provided in the articles of incorporation or the by-
laws.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
65. I. Membership in and all rights arising from a non-stock corporation are personal and non-
transferable.
II. A member cannot vote by proxy.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Close Corporations
66. The following are corporations that cannot incorporate as a close corporation, except:
a. Mining or oil companies
b. Stock exchanges
c. Banks
d. Industrial companies
67. The following are characteristics of a close corporation, except:
a. Any action by the directors of a close corporation without a meeting shall
nevertheless be deemed valid.
b. Pre-emptive right does not extend to all stock issuances.
c. Deadlock in the board is settled by the SEC upon the written petition by the
stockholder.
d. A stockholder may withdraw and avail of his right of appraisal.
68. Any person to whom stock of a close corporation has been issued or transferred has, or is
conclusively presumed to have notice, except:
a. That he is a person not eligible to be a holder of stock of the corporation.
 b. That transfer of stock to him would cause the stock of the corporation to be held by
more than the number of persons permitted by its articles of incorporation to hold
stock of the corporation; or
c. That the transfer of stock is in violation of a restriction on transfer of stock.
d. None of the above.
69. An action by the directors of a close corporation without a meeting shall not be deemed valid:
a. Before or after such action is taken, written consent thereto is signed by a majority of
the directors.
b. All the stockholders have actual or implied knowledge of the action and make no
prompt objection thereto in writing.
c. The directors are accustomed to take informal action with the express or implied
acquiescence of all the stockholders.
d. All the directors have express or implied knowledge of the action in question and
none of them makes prompt objection thereto in writing.
Special Corporations
70. Is one formed by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder of a
religious denomination, sect, or church, for the purpose of administering or managing, as trustee,
the affairs, properties and temporalities of such religious denomination, sect or church?
a. Corporation sole
b. Corporation aggregate
c. Close corporation
d. Corporation de facto
71. Is one formed for the same purpose as corporation sole. It consists of two or more persons?
a. Corporation sole
b. Corporation aggregate
c. Close corporation
d. Corporation de facto
Dissolution
72. I. A corporation sole may be dissolved and its affairs settled voluntarily by submitting to the
Commission a verified declaration of dissolution.
II. Upon approval of such declaration of dissolution by the SEC, the corporation sole shall cease
to carry on its operations except for the purpose of winding up its affairs.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
73. I. A One Person Corporation is a corporation with a single stockholder.
II. Only a natural person, trust, or an estate may form a One Person Corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
74. I. A One Person Corporation shall indicate the letters “OPC” either below or at the end of its
corporate name.
II. The single stockholder shall be the sole director and president of the One Person Corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Foreign Corporation
 75. Is one formed, organized or existing under any laws other than those of the Philippines and whose
laws allow Filipino citizens and corporations to do business in its own country or state?
a. Foreign corporation
b. Domestic corporation
c. Government owned- and controlled corporation
d. None of the above
76. The following are the requisites for a foreign corporation under the Corporation Code:
I. It must be formed, organized, or existing under any laws other than those of the
Philippines.
II. The laws of the country where the corporation was organized allow Filipino citizens
and corporations to do business in its own country or state.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Investigations, Offenses and Penalties
77. I. The SEC may investigate an alleged violation of the Revised Corporation Code, or of a rule,
regulation, or order of the SEC.
II. The SEC may administer oaths and affirmations, issue subpoena and subpoena duces tecum,
take testimony in any inquiry or investigation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
78. I. Whenever the SEC has reasonable basis to believe that a person has violated, or is about to
violate the Revised Corporation Code, a rule, regulation, or order of the SEC, it may direct such
person to desist from committing the act constituting the violation.
II. The SEC may issue a cease and desist order ex parte to enjoin an act or practice which is
fraudulent or can be reasonably expected to cause significant, imminent, and irreparable danger
or injury to public safety or welfare.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
79. I. A corporation that conducts its business through fraud shall be punished with a fine ranging
from P200,000 to P2,000,000.
II. A corporation used for fraud, or for committing or concealing graft and corrupt practices as
defined under pertinent statutes, shall be liable for a fine ranging from P100,000 to P5,000,000.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
COOPERATIVES
Membership
80. A cooperative may have 2 kinds of members, to wit:
a. Regular members
b. Associate members
c. All of the above
d. None of the above
81. It is one who has complied with all the membership requirements and entitled to all the rights and
privileges of membership.
 a. Regular members
b. Associate members
c. All of the above
d. None of the above
Administration
82. It means allowing a delegate of a cooperative to represent or vote in behalf of another delegate of
the same cooperative.
a. Voting Trust Agreement
b. Voting by Proxy
c. None of the above
d. All of the above
Responsibilities, Rights and Privileges of Cooperatives
83. Except for one, every cooperative shall have the following documents ready and accessible to its
members and representatives of the CDA for inspection during reasonable office hours at its
official address:
a. A copy of the Philippine Cooperative Code and all other laws pertaining to
cooperatives.
b. A copy of the regulations of the SEC.
c. A copy of the articles of cooperation and bylaws of the cooperative.
d. A register of members.
84. It refers to the officers/ individuals duly authorized by the cooperative to prepare, certify/ approve
the reports and in whose had the delay/ failure has occurred.
a. General assembly
b. Committee members
c. Accountable officers
d. Board of Trustees
85. Cooperatives shall be accorded the following privileges:
a. Cooperatives shall enjoy the privilege of depositing their sealed cash boxes or
containers, documents or any valuable papers in the safes of the municipal or city
treasurers and other government offices free of charge.
b. Cooperatives organized among government employees, shall enjoy the free use of any
available space in their agency.
c. In areas where appropriate cooperatives exist, the preferential right to supply
government institutions and agencies rice, corn and other grains, fish and other marine
products, meat, eggs, milk, vegetables, tobacco and other agricultural commodities
produced by their members shall be granted to the cooperatives concerned.
d. All of the above.
Insolvency of Cooperatives
86. In case a cooperative is unable to fulfill its obligations to creditors due to insolvency, such
cooperative may apply for such remedies as it may deem fit under the provisions of:
a. Financial Rehabilitation and Insolvency Act
b. Securities Regulation Code
c. Philippine Cooperative Code
d. Civil Code of the Philippines
87. The creditor/s’ petition for rehabilitation shall be verified to establish the substantial likelihood
that the debtor may be rehabilitated, and include:
a. Identification of the debtor its principal activities.
b. The specific relief sought under this Act.
c. A Rehabilitation Plan
d. All of the above
Dissolution of Cooperatives
 88. It refers to the termination of the juridical personality of the cooperative through appropriate
judicial proceedings, or by an order of the CDA, or through its own initiative.
a. Dissolution
b. Liquidation
c. Termination
d. None of the above
89. I. The dissolution of a cooperative may either be voluntary or involuntary.
II. Dissolution is voluntary if it is initiated through the voluntary decision of the members of
cooperatives.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Capital, Property and Funds
90. Cooperatives may derive their capital from any or all of the following sources, except:
a. Member’s share capital.
b. Loans and borrowings including deposits.
c. Revolving capital which consists of the deferred payment of patronage refunds, or
interest on share capital.
d. Issued shares of stock.
91. I. No member of primary cooperative other than cooperative itself shall own or hold more than
5% of the share capital of the cooperative.
II. Where a member of cooperative dies, his heir shall be entitled to the shares of the decedent.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Audit, Inquiry and Members’ Right to Examine
92. An independent CPA accredited by the CDA, whose relationship to the client is to express an
opinion on the financial statements.
a. Cooperative Internal Auditor
b. Cooperative External Auditor
c. Cooperative Inspector
d. Cooperative Examiner
93. It means an intentional act by one or more individuals among management, employees, or third
parties that result in a misrepresentation of financial statements.
a. Fraud
b. Negligence
c. Tort
d. Mistake
94. It refers to the procedure where the cooperative assesses its social impact and ethical performance
vis-à-vis its stated vision, goals and social missions.
a. Financial Audit
b. Performance Audit
c. Social Audit
d. None of the above
Allocation and Distribution of Net Surplus
95. I. Every cooperative shall determine its net surplus at the close of every fiscal year and at such
other times as may be prescribed by the bylaws.
II. The net surplus shall be construed as profit.
a. Only I is true
 b. Only II is true
c. Both are true
d. Both are false
96. One if not correct. The net surplus of every cooperative shall be distributed as follows:
a. An amount for the reserve fund which shall be at least 10% of net surplus.
b. An amount for the education and training fund, shall not be more than 10% of the net
surplus.
c. An amount for the community development fund, which shall not be less than 7% of
the net surplus.
d. An optional fund, a land and building, and any other necessary fund the total of which
shall not exceed 7%.
Types of Cooperatives (Banks, Insurance, Public Service)
97. I. The cooperative banks shall be under the supervision of the BSP.
II. Cooperative banks shall provide financial and banking services to its members.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
98. I. Existing cooperatives may organize themselves into a cooperative insurance entity for the
purpose of engaging in the business of insuring life and property of cooperatives and their
members.
II. The provisions of the Insurance Code and all other laws and regulations relative to the
organization and operation of an insurance company shall apply to cooperative insurance entities
organized under the Philippine Cooperative Code.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
99. A cooperative organized to render public services as authorized under a franchise or certificate of
public convenience and necessity duly issued by the appropriate government agency.
a. Producers cooperative
b. Public service cooperative
c. Workers cooperative
d. Financial services cooperative
Miscellaneous & Final Provisions
100. It is a process whereby a neutral third party takes a vigorous and active role in assisting
disputants formulate solutions in order to reach an amicable settlement.
a. Conciliation
b. Mediation
c. Conference
d. Hearing