Corporation stockholders of a stockholder or members

 Created by the operation of such share thereof

law dividends or  A close corporation- the
 Have rights to succession allotment of the stockholders or members
of powers, attributes, and surplus profits on are limited to a few persons
properties expressly the basis of such as the members of the
authorized by law shares held family
 Corporation has 5 or more  Non-stock corporation As to relationship to other
members o Generally non- corporations
Attributes of a corporation profit in nature,  A parent or holding
 Artificial being like religious and corporation- has the
 Created by operation of law charitable power directly or indirectly
 Right of succession institutions; the upon own more than 50%
 Has powers, attributes, and owners are shares of voting stock of
properties expressly called members another corporation and
authorized by law or According to numbers of can elect majority of the
incident to its existence stockholders or members board of directors of such
Nationality or citizenship of a  Corporation aggregate- other corporation which is
corporation composed of more than called subsidiarity
 Domestic corporation- the one member or corporation
corporation is organized stockholder, like the San  Subsidiary corporation-
accordance with Philippine Miguel Corporation, PLDT, Related to another
laws RCBC, Meralco, and others corporation that a majority
 Foreign corporation-  Corporation sole- of its directors can be
Organized in accordance composed of single elected directly or indirectly
with laws of countries other member and his by such other corporation
than the Philippines successors in office called parent corporation;
Characteristics of a Corporation Ecclesiastical and kay the parent corporation
 Greater Capital  Ecclesiastical owns more than 50%
corporation- created to shares of the subsidiary
 Limited liability
secure the public worship corporation
 Better management
of God  Affiliated corporation-
 Unlimited life
 Lay corporation- has significant influence by
 Transferability of interest another corporation owing
established for temporal
 Separate entity purposes and is comprised at least 20% but not more
Kinds of Corporation of laymen than 50% of its outstanding
According to its purpose of De jure and de facto common stock, or by a long
operation
 De jure corporation- term lease of its properties
 Public corporations created in strict or or other control device
o Formed or substantial conformity to Other kinds of corporation
organized for the the requirements of the law  Wasting assets
government (e.g governing corporation corporation- the purpose
SEC, DBP, or
 De facto corporation- of which is to invest its
portion of the capital in a specific
Defectively created that its
state such as property and afterwards
creation do not conform
town, city, consume that property or
strictly or substantially with
province or exact value at a profit, such
laws governing corporation
barangay mining a property and oil or
Eleemosynary and civil
 Private corporation
 Eleemosynary and civil- gas as well
o Created wholly  Government owned or
created for purposed of
or in part for controlled corporation-
charities, such as
purposes of organized by the
orphanage, hospitals
private government or of which the
schools, and the like
companies such
 Civil corporation- created government is the majority
as PLDT, stockholder, such as the
to facilitate the transaction
Meralco, San Philippines Railways,
of the business
Miguel, BPI, NAPCOR, LBP, and
As to nationality
cooperatives,
religious, and  Domestic corporation- National Development
corporation created or Corporation
cooperative  Corporation by
institutions existing under the laws of
the Philippines prescription- where
According to share authorized to
issue  Foreign corporation- corporate powers have
corporation created or been exercised by a body
 Stock corporation of men for such a length of
o Corporations existing under the laws of
other states or countries time to raise presumption
which has capital of the grant of an ancient
stocks divided other than the Philippines
Open and close charter to their predecessor
into shares and such as the Roman
are authorized to  An open corporation- the
general public may become Catholic Church
distribute to
  Corporation by estoppel- other than the  Common Stock- entitles
is not really a corporation business the owner the power to vote
but which has represented specified in the to elect a director in a board
itself to the public as a real Articles of and to a pro rate dividends,
corporation and which corporation without any priority or
cannot be permitted to o Minority preference over any other
deny such representation stockholders stockholder
 Quasi-public may be at the  Preferred stock- class of
corporation- private mercy of majority stock which is entitled to a
corporation which has of stockholders certain preference over
accepted from the state of Owners of a corporation common stock such as
grant of a franchise or  Incorporators- over dividends and assets
contract involving the stockholders or members of the corporation in case of
performance of public mentioned in the articles of liquidation
duties such as Meralco, incorporation as originally Voting and Non-voting stocks
PLDT, LRT and MRT forming and composing the  Voting stock- class of
 Quasi corporation- corporation and who are shares of stock which
association of government signatories thereof entitles the holder to vote in
or political institution or  Corporators- Those who the meeting of the
officers which is not a composed the corporation corporation, the common
corporation in the full sense whether stockholders or stocks or ordinary shares
but which is invested by law members  Non-voting stock- shares
with some of the attributes  Stockholders or of stock which is not
of a corporation shareholders- owners of entitled to vote in the
Advantages and Disadvantages of shares in a corporation meeting of the corporation,
a corporation which has capital stocks normally called the
 Advantages of a  Members- corporators of a preferred stock or
Corporation corporation which has no preference share
o Act as a juridical capital stock Par and Non-par Value stock
person with legal  Subscriber- one who has  Par value stock- class of
personality agreed to take shares of stock with a par value
o Continuity of life stock from the corporation appearing on the face of
o Liability of the under a subscription the certificate of a stock
stockholders is agreement on the original  Non-par value stock-
limited to capital issue of such stocj but not class of stock without any
investment fully paid nominal or par value on the
o There is better The four rights of Stockholders face of the stock certificate
management as  Right to vote in an annual  Preferred stock- required
the best service stockholders meeting by the law to have par
may be extracted  Right to save in corporate value; should the
from the bigger profit corporation issue preferred
membership of a  Right to share in the no-par value stocks, such
corporation distribution of asset upon stocks should always have
o There is more corporate liquidation stated values required by
uniformed form  Pre-emptive right or the law
of control which right to purchase additional  The corporation law
is reposed in the shares of stock in the event provides that no par value
board of that the corporation share of stock may not be
directors increases the amount of issued for an amount less
o Shares of stocks stock outstanding that P5,000
may be Important Qualifications of Other classes
transferred even Corporate officers  Formative stock- starting
without the  President- must be a minimum number of stocks
consent of other director to be subscribed as
stockholders  Treasurer- may or may not required by the charter and
o Greater source be a director not necessarily by the law
of capital 
 Secretary- may or may not Over-issued or spurious
 Disadvantages of a be a director, but must be a stock- stock issued in
Corporation resident and citizen of the excess of the authorized
o Subject to Philippines capital stock and is thereof
greater
 Any two or more positions void
government  Treasury stock- stock
may be held concurrently
control lawfully issued by the
by the same person, except
o Frequent and corporation and
that no one shall act as a
varied reports subsequently reacquired
president and secretary or
are required of a by it
as president and treasurer
corporation  Watered stock- stock
at the same time
o Corporation may which has been issued by
Classes of shares of stock
not engage in the corporation as fully paid
any business
 up when in fact it is not well as the fair computation o Manner of
because it has been issued of dividends electing board
as bonus or otherwise, Disadvantages directors
without any consideration  Subscribers are liable for o Term at office of
at all, or for less than par or unpaid subscriptions or in the directors
for property, labor or case of default, refund of o Duties of the
services at an what has been previously directors
overvaluation paid may not be made o Procedures of
 Bonus stock- stock issued  Misrepresentation of its amending the
to persons who subscribe stock value articles of
for bond of a corporation incorporation
under the condition that Required Minimum Authorized o Procedures for
they shall receive an equal Capital Stock and Minimum Paid- amending by-
amount of ordinary shares up Capital laws
therewith, and the money  New corporation code does Subscription and Subscribed
paid on the subscription is not require any minimum capital stock
payment for the bond alone authorized capital stock as  Subscription- an
 Promotion stock- stock long as the paid-up capital agreement to purchase
issued to those who, in the is not less than P5,000 shares of unissued stock.
case of a mining company, Minimum subscription and It may be exist before
may originally own the minimum paid-up capital incorporation or after
mining ground or valuable  As required by law, 25% of incorporation
rights connected therewith, the total authorized capital  Subscription which are not
in consideration of their stock should be subscribed yet paid in full are known
deeding the same to the and 25% of the total as subscribed capital
mining company when the subscription should be stock. In accounting, the
company is incorporated paid-up account title is subscribed
 Founder’s stock- stock Stock certificate share capital
issued to the founders or  Document issued when an Legal Capital
organizers of a corporation investor purchased shares  Per value shares- amount
 Shares in escrow- shares of stock and pay his equal to the aggregate of
subject to an agreement subscription in full all issued and subscribed
under which the shares are Articles of Incorporation per value shares multiplied
deposited by the grantor or  Enumerates the powers by it s par value
his agent with a third and restrictions conferred  Non-par value shares-
person, to be delivered by upon the corporation by the aggregate of cash or fair
their depository to the government, and also value of non-cash assets
grantee (buyer) or constitute a contract received as compensation
subscriber upon the among the incorporators for all issued non-par value
happening of certain  All corporations organized shares
conditions under this code shall file
 Callable or redeemable with securities and Chapter 7: Accounting for the
preferred stock- this share exchange of commission Issuance of shares of stock
can be redeemed by the articles of incorporation in  Share capital
corporation at a specified any of the official o Amount of
rate, which is usually higher languages duly signed and shares of stock
than par value or original acknowledged by all of the issued and
issued price incorporators subscribed by
 Convertible Preferred By-Laws owners in the
stock- is another type of  By laws of the corporation corporation
preferred stock which can supplement the articles of o Includes: share
be changed or converted to incorporation. The by-laws capital at par or
another class of stock usually governs the stated value,
usually common stock, at a internet and administration subscribed share
certain price within a of the organization capital at par or
specified period or time at Content of By-Laws stated value,
the option of the holder  The date, place and subscription
Advantages and Disadvantages of manner by which annual available
Par value shares stockholders meetings are  Reserves
to be called o It includes: share
Advantages o Manner of premium on
 Convenience or ease of conducting share of capital,
sale meetings other additional
 Greater protection to the o Manner of paid in capital
creditors, since the shares voting and the (APIC) and
cannot be sold below par use of appropriations of
 Shareholders and investors properties retained
are secured of sale either at earnings
par value or above par as
  Retained earnings indicated in the  Cash dividend payable-
o Net accumulated authorized liability account title used
profits of the capital stock, when the dividend to be
business less the common and paid to shareholders is in
appropriations of preferred, it is the form of cash
retained earning necessary to  Stock dividend
for specific have two share payable/Stock dividend
purposes capital to be issued
 Treasury share accounts o Not a liability
o Re-acquired instead of only account but an
share of stock one equity used
previously when the
issued to the Additional paid in capital account dividend
public  The amount of cash and declared is in the
Accounting Terminologies and property received by the form of
Titles related to the Shareholder’s corporation from the company’s own
equity Section stockholder or subscriber unissued shares
 Authorized share capital for the shares of stock of stocks
or authorized issued and subscribed  Due from highest bidder
o Maximum  Share premium- account o Account title
number of title used for the amount used to record
shares that the paid in excess of par or the amount to be
corporation are stated value on sales of collected from
allowed by the shares of stock the highest
Securities and  Additional paid in capital- bidder of
Exchange Stock dividend- account delinquent
Commission to title used for the excess of stocks
issue to market value of the shares  Organization Cost or Pre-
stockholders of stock over par value of Operating Expenses
 Unissued share capital small stock dividend issued o Certain costs
o Number of or to be issued that are already
shares of stock  Additional paid in capital- incurred during
that remains Treasury share- the gain the incorporation
unsold after from sales of treasury process and
deducting the shares before a
issued capital  Additional paid in capital- corporation
stock from the Donated assets- assets actually starts its
authorized which are sometimes operation
capital stock donated to a corporation for o Such costs
 Contributed Capital one reason to another include those of
o Amount of cash  Subscribed share capital promotion, pre-
and property o Account title incorporation
received by the used to record meetings, legal
corporation from shares that are fees and other
the stockholder the subject of a professional
or subscriber for subscription fees, cost to
the shares of agreement that issue shares of
stock issued and is either paid or stock, printing of
subscribed still unpaid and stock
 Share capital/capital stock certificate certificates,
stock is not yet in the stock and
o Account title hand of the transfer book,
used if only one subscriber seal of the
kind of stock is  Subscription receivable corporation and
authorized to be o Account title of other costs
issued (ordinary subscription of  Shareholders/
share or shares of stock Stockholder’s Equity
common share) that remains o Residual amount
o Amount of the unpaid or still after the claims
share capital collectible from of the creditors
account is the the subscriber are subtracted
total value of  Discount on share capital from the total
shares of stocks o Account title assets of the
fully paid and on used when the corporation
which a amount paid or  Legal capital
certificate stock subscribed is o For par value
is issued below the par shares- amount
o When there are value or stated equal to the
two classes of value aggregate of all
stocks issued and
 subscribed par dividend capital and
value shares purposes crediting
times its par  Minute book authorized
value o Contains the share capital at
o For non-par minutes of the par or stated
value shares- meeting of the value
aggregate of board of Accounting for no-par value
cash or fair value directors and the shares
of non-cash meeting of  Corporations are allowed
assets received stockholders by law to issue no par value
as compensation o Basis for some stocks under the following
for all issued no- accounting conditions
par value shares journal entries  The entire consideration
 Stated capital such as received by the corporation
o Value of the declaration of for its no-par value shares
shares as dividends, shall be treated as capital,
approved by the appropriations of and shall not be available
Board when retained for distribution as dividend
issuing no- par earnings,  No par value- shares when
value shares declaration of issued shall be deemed
 Outstanding share delinquent fully paid and non-
capital or outstanding subscription and assessable and the holder
capital others of such shares shall not be
o Total shares of  Book of accounts liable to the corporation or
stock issued to o All transactions to its creditors in respect
shareholders of the business thereto
plus total shares are recorded  Shares without par value
subscribed, o General journal, may not be issued for less
whether fully or special journal, than P5.00 per share
partial paid, as general ledger,  Preference shares shall not
long as there is and subsidiary be issued as no par value
binding ledgers stock
subscription  Stock certificate book  Banks, trust companies,
agreement and o A book printed insurance companies, and
reduced by blank certificates building and loan
treasury shares Accounting for the formation of a associations shall not be
o What is corporation permitted to issue no-par
presented to  Memorandum Entry value shares of stock
public Method
Corporate Books and Record o No journal entry
 Stock and Transfer Book on the date of
o The names of approval by the
stockholders and Securities and
their stock Exchange
acquisitions and Commission of
disposals are the authority to
recorded; issue shares of
records the stock to the
transfer of public
shares of stocks o Only a notation
from one or what is
stockholder to called
another memorandum
 Subscription book entry in the
o Book printed general journal
blank and general
subscription ledger is made
agreement  Journal entry method
 Stockholder’s Ledger o Required in
o Details the recording the
number of authorized share
shares issued to capital on the
each date of the
stockholders approval by the
o Basis for SEC
stockholder’s o Authorized
record of the capital stock is
corporation as of recorded by
a given date for debiting
unissued share