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CHAPTER 7: SARBANES-OXLEY, INTERNAL CONTROL, AND CASH
1. The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: FNMN.WARD.16.07-01 - LO: 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.10 - Internal Control
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics
2. SarbanesOxley’s purpose is to maintain public confidence and trust in the financial reporting of companies.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Ethics
3. There are three internal control objectives and they are to safeguard the company's reputation, ensure accurate
financial reports, and ensure compliance with applicable laws.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Ethics
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 7: Sarbanes-Oxley, Internal Control, and Cash
4. The Sarbanes-Oxley Act requires that financial statements of all public companies report on management's
conclusions about the effectiveness of the company's internal control procedures.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
BUSPROG: Ethics
5. Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus deter fraud and
prevent misleading financial statements.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Ethics
6. The control environment in an internal control structure is the overall attitude of management and employees
about the importance of internal control.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCT.AICPA.BB.01 - Industry
BUSPROG: Analytic
7. Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the
control procedure: separating operations, custody of assets, and accounting.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
8. Internal control is enhanced by separating the control of a transaction from the record-keeping function.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
9. A backlog in recording transactions is an example of a warning sign from the accounting system.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
10. Money orders are considered cash.

a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.10 - Internal Control
BUSPROG: Analytic
11. A customer's check received in settlement of an account receivable is considered cash.

a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.04 - Cash vs. Accrual
BUSPROG: Analytic
12. Businesses who have several bank accounts, petty cash, and cash on hand, would maintain a separate ledger
account for each type of cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
13. For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash
payments divided among different employees.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
14. If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortages have
exceeded cash overages for the period.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
15. If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as an "other income"
item on the income statement.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements
BUSPROG: Analytic
16. An example of good internal controls over cash payments is the taking of all cash discounts offered.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
17. A voucher is a form on which is recorded pertinent data about a liability and the particulars of its payment.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
18. When the voucher system is used, the amount due on each voucher represents the credit balance of an account
payable if the voucher is in full payment to a creditor.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
19. A voucher system is an example of an internal control procedure over cash payments.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
20. A voucher is a written authorization to make a cash payment.

a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
21. The bank often informs the company of bank service charges by including a credit memo with the monthly
bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
ACCT.ACBSP.APC.11 - Bank Reconciliation
BUSPROG: Analytic
22. Bank customers are considered creditors of the bank so the bank shows their accounts with credit balances on the
bank's records.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
23. Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
24. For efficiency of operations and better control over cash, a company should maintain only one bank account.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
25. In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per
bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
ACCREDITING STANDARDS: ACCT.ACBSP.APC.11 - Bank Reconciliation
BUSPROG: Analytic
26. In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
27. In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to
the balance per company's records.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
28. In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the
balance per company's records.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
29. A check for $342 was erroneously charged by the bank as $432. In order for the bank reconciliation to balance,
you must add $90 to the bank statement balance.
a. True
b. False
ANSWER: True
Bloom's: Applying
BUSPROG: Analytic
30. If an adjustment for an NSF check is made in a company’s bank reconciliation, then the company must have written a
bad check during the month.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
31. The amount of the "adjusted balance" appearing on the bank reconciliation as of a given date is the amount that
is shown on the balance sheet for that date.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
32. All bank memos reported on the bank reconciliation require entries in the company's accounts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
33. The bank reconciliation is an important part of the system of internal controls.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
34. The main reason that the bank statement cash balance and the company's cash balance do not initially balance is
due to timing differences.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
35. The bank reconciles its statement to the company's records.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
36. In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by
the bank is added to the balance per company's records.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
37. In preparing a bank reconciliation, the amount of an error indicating the recording of a check in the journal for
an amount larger than the amount of the check is added to the balance per company's records.
a. True
b. False
ANSWER: True
BUSPROG: Analytic
38. A check outstanding for two consecutive months will appear only on the first month's bank reconciliation.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
39. After a bank reconciliation is completed, journal entries are prepared for items in the balance per
company's records as well as items in the balance per bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
40. A business that requires all cash payments be made by check can not use a petty cash system.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
41. In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to
Accounts Payable and a credit to Petty Cash.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
42. Expenditures from a petty cash fund are documented by a petty cash receipt.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
43. The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance
in the petty cash account.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
44. When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures
made since the fund was last replenished.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
45. Most companies who have several bank accounts, petty cash, and cash on hand, would list each separately on the
balance sheet.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
46. A petty cash fund is used to pay relatively large amounts.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
47. The petty cash fund eliminates the need for a bank checking account.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
48. A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
49. Cash equivalents include short-term investments that will be converted to cash within 120 days.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
BUSPROG: Analytic
50. Money market accounts, commercial paper, and U. S. Treasury bills are examples of cash equivalents.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
51. The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
BUSPROG: Analytic
52. SarbanesOxley applies to

a. publicly held companies
b. notforprofit organizations
c. privately held businesses
d. all of these
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Ethics
53. "To maintain public confidence and trust in the financial reporting of companies" is the purpose of
a. the FASB
b. the IRS
c. SarbanesOxley
d. GAAP
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Ethics
54. Which one of the following below is not an element of internal control?
a. risk assessment
b. monitoring
c. information and communication
d. cost-benefit considerations
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
55. Which one of the following is not a factor that influences a business's control environment?
a. management's philosophy and operating style
b. organizational structure
c. proofs and security measures
d. personnel policies
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
56. When a firm uses internal auditors, it is adhering to which of the following internal control elements?
a. risk assessment
b. monitoring
c. proofs and security measures
d. information and communication
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
57. The objectives of internal control are to

a. control the internal organization of the accounting department personnel and equipment
b. provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports
are accurate, and laws and regulations are complied with
c. prevent fraud, and promote the social interest of the company
d. provide control over "internal-use only" reports and employee internal conduct
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
58. Which one of the following reflects a weak internal control system?
a. all employees are well supervised
b. a single employee is responsible for comparing a receiving report to an invoice
c. all employees must take their vacations
d. a single employee is responsible for collecting and recording of cash
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
59. Internal control does not consist of policies and procedures that
a. protect assets from misuse
b. ensure employees and managers comply with laws and regulations
c. guarantee the company will earn a profit
d. ensure that business information is accurate
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
60. A firm's internal control environment is not influenced by

a. management's operating style
b. organizational structure
c. personnel policies
d. monitoring policies
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
61. An element of internal control is

a. risk assessment
b. journals
c. subsidiary ledgers
d. controlling accounts
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
62. A necessary element of internal control is

a. database
b. systems design
c. systems analysis
d. information and communication
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
63. Which of the following should not be considered cash by an accountant?

a. money orders
b. bank checking accounts
c. postage stamps
d. travelers' checks
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
64. The cash account in the company's ledger is a(n)

a. asset with a normal debit balance
b. asset with a normal credit balance
c. liability with a normal debit balance
d. liability with a normal credit balance
ANSWER: a
DIFFICULTY: Easy
ACCT.ACBSP.APC.15 - Current Assets Reporting
BUSPROG: Analytic
65. The portion of an invoice that is returned with payment is a

a. remittance advice
b. voucher
c. debit memo
d. credit memo
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
66. The debit balance in Cash Short and Over at the end of an accounting period is reported as
a. an expense on the income statement
b. income on the income statement
c. an asset on the balance sheet
d. a liability on the balance sheet
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
67. Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in
a bank are called
a. accounting controls
b. cash controls
c. FASB controls
d. GAAP controls
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
68. A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n)
a. invoice
b. voucher
c. debit memo
d. remittance advice
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
69. EFT
a. means Efficient Funds Transfer
b. can process certain cash transactions at less cost than by using the mail
c. makes it easier to document purchase and sale transactions
d. means Effective Funds Transfer
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
70. A voucher is usually supported by

a. a supplier's invoice
b. a purchase order
c. a receiving report
d. all of these
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
71. Credit memos from the bank

a. decrease a bank customer's account
b. are used to show a bank service charge
c. show that a company has deposited a customer's NSF check
d. show the bank has collected a note receivable for the customer
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
72. Consider the following information taken from the cash account. Assume cash payments were 80% of collections.
Cash
?? Beg. balance
$115,375 Collections
?? Disbursements
$80,275 End balance
How much was the beginning balance of the cash account?
a. $57,200
b. $92,300
c. $103,350
d. $35,100
ANSWER: a
DIFFICULTY: Challenging
Bloom's: Applying
BUSPROG: Analytic
73. A bank statement

a. is a credit reference letter written by the company's bank
b. shows a company the financial position of the bank as of a certain date
c. is a bill from the bank for services rendered
d. shows the activity that increased or decreased the company's account balance
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
74. A debit or credit memo describing entries in the company's bank account may be enclosed with the
bank statement. An example of a credit memo is
a. deposited checks returned for insufficient funds
b. a promissory note left for collection
c. a service charge
d. notification that a customer's check for $375 was recorded by the company as $735 on the deposit ticket
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
75. A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This
item would be included on the bank reconciliation as a(n)
a. addition to the balance per the company's records
b. addition to the balance per the bank statement
c. deduction from the balance per the bank statement
d. deduction from the balance per the company's records
ANSWER: a
BUSPROG: Analytic
76. A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry
is required in the company's accounts?
a. debit Accounts Payable; credit Cash
b. debit Cash; credit Accounts Receivable
c. debit Cash; credit Accounts Payable
d. debit Accounts Receivable; credit Cash
ANSWER: c
BUSPROG: Analytic
77. A bank reconciliation should be prepared periodically because

a. the company's records and the bank's records are in agreement
b. the bank has not recorded all of its transactions
c. any differences between the company's records and the bank's records should be determined, and any errors
made by either party should be discovered and corrected
d. the bank must make sure that its records are correct
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
78. The bank reconciliation

a. should be prepared by an employee who records cash transactions
b. is part of the internal control system
c. is for information purposes only
d. is sent to the bank for verification
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
79. Journal entries based on the bank reconciliation are required in the company's accounts for
a. outstanding checks
b. deposits in transit
c. bank errors
d. book errors
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
80. Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the
item is
a. a deduction from the balance per company's records
b. an addition to the balance per bank statement
c. a deduction from the balance per bank statement
d. an addition to the balance per company's records
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
81. Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the
company's accounts?
a. debit Miscellaneous Administrative Expense; credit Cash
b. debit Cash; credit Other Income
d. debit Accounts Payable; credit Cash
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
82. A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item
would be included in the bank reconciliation as a(n)
a. deduction from the balance per the company's records
b. addition to the balance per the bank statement
c. deduction from the balance per the bank statement
d. addition to the balance per the company's records
ANSWER: a
BUSPROG: Analytic
83. A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is
required in the company's accounts?
a. debit Accounts Payable; credit Cash
ANSWER: a
BUSPROG: Analytic
84. Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item
would be included on the bank reconciliation as a(n)
a. deduction from the balance per company's records
b. addition to the balance per bank statement
c. deduction from the balance per bank statement
d. addition to the balance per company's records
ANSWER: d
BUSPROG: Analytic
85. Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the
company. This item is a(n)
ANSWER: d
BUSPROG: Analytic
86. Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the
customer. What entry is required in the company's accounts?
a. debit Notes Receivable; credit Cash
b. debit Cash; credit Miscellaneous Income
c. debit Cash; credit Notes Receivable and Interest Revenue
ANSWER: c
BUSPROG: Analytic
87. The amount of deposits in transit is included on the bank reconciliation as a(n)
a. deduction from the balance per the company's books
b. deduction from the balance per bank statement
c. addition to the balance per bank statement
d. addition to the balance per company books
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
88. The amount of the outstanding checks is included on the bank reconciliation as a(n)
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
89. Which of the following items that appeared on the bank reconciliation did not require a journal entry?
a. bank service charges
c. NSF checks
d. a check for $630, recorded in the check register for $360
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
90. What entry is required in the company's accounts to record outstanding checks?
a. debit Accounts Receivable; credit Cash
d. no entry is required
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
91. Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item
would be included on the bank reconciliation as a(n)
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
92. Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is
required in the company's accounts?
a. debit Other Income; credit Cash
b. debit Cash; credit Other Income
c. debit Cash; credit Accounts Receivable
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
93. The amount of cash to be reported on the balance sheet at June 30 is the
a. total of the cash column in the cash receipts journal as of June 30
b. adjusted balance appearing in the bank reconciliation for June 30
c. total of the cash column in the cash payments journal as of June 30
d. balance as of June 30 on the bank statement
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
94. Which of the following would be deducted from the balance per books on a bank reconciliation?
a. service charges
b. outstanding checks
c. deposits in transit
d. notes collected by the bank
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
95. Which of the following would be added to the balance per books on a bank reconciliation?
a. service charges
b. outstanding checks
c. deposits in transit
d. notes collected by the bank
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
96. Which of the following would be subtracted from the balance per books on a bank reconciliation?
c. notes collected by the bank
d. error in recording a check for $732 as $723
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
97. Which of the following would be subtracted from the balance per bank on a bank reconciliation?
c. notes collected by the bank
d. service charges
ANSWER: a
DIFFICULTY: Easy
BUSPROG: Analytic
98. A bank reconciliation should be prepared

a. whenever the bank refuses to lend the company money
b. to explain any difference between the company's balance per books with the balance per bank
c. by the company's bank
d. by the person who is authorized to sign checks
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
99. Minor Company had checks outstanding totaling $19,200 on its April bank reconciliation. In May, Minor
Company issued checks totaling $64,900. The May bank statement shows that $47,600 in checks cleared the bank
in May. A check from one of Minor Company's customers in the amount of $300 was also returned marked
"NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be
a. $28,400
b. $66,800
c. $17,300
d. $36,500
ANSWER: d
Bloom's: Applying
BUSPROG: Analytic
100. Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation.
Calculate the adjusted cash balance per books on May 31.
Cash balance per books, 5/31 $5,400

Deposits in transit 375
Notes receivable and interest collected by bank 650
Bank charge for check printing 40
Outstanding checks 2,400
NSF check 140
a. $5,870
b. $6,245
c. $4,930
d. $3,845
ANSWER: a
Bloom's: Applying
BUSPROG: Analytic
101. Gunnar Company gathered the following reconciling information in preparing its September bank
reconciliation. Calculate the adjusted cash balance per books on September 30.
Cash balance per books, 9/30 $2,750

Deposits in transit 200
Notes receivable and interest collected by bank 630
Bank charge for check printing 50
NSF check 290
a. $5,130.
b. $3,690.
c. $3,040.
d. $1,590.
ANSWER: c
Bloom's: Applying
BUSPROG: Analytic
102. Jamison Company gathered the following reconciling information in preparing its June bank reconciliation:
Cash balance per bank, 6/30 $13,000

Note receivable collected by bank 4,000
Deposits-in-transit 2,500
Bank service charge 35
NSF check 1,900
Using the above information, determine the cash balance per books (before adjustments) for the Jamison
Company.
a. $8,065
b. $10,565
c. $15,065
d. $6,435
ANSWER: d
Bloom's: Applying
BUSPROG: Analytic
103. Thompson Corporation gathered the following reconciling information in preparing its October bank reconciliation:
Cash balance per bank, 10/31 $17,000

Note receivable collected by bank 4,800
Deposits-in-transit 3,000
Bank service charge 50
NSF check 2,300
Using the above information, determine the cash balance per books (before adjustments) for the Thompson
Corporation.
a. $11,050
b. $19,450
c. $15,950
d. $11,150
ANSWER: a
Bloom's: Applying
BUSPROG: Analytic
104. During a bank reconciliation process,

a. outstanding checks and deposits in transit are added to the bank statement balance
b. outstanding checks are subtracted and deposits in transit are added to the bank statement balance
c. outstanding checks and deposits in transit are subtracted from the bank statement balance
d. outstanding checks are added and deposits in transit are subtracted from the bank statement balance
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
105. The following data were gathered to use in reconciling the bank account of Savannah Company:
Balance per bank $16,750

Balance per company records 16,125
Bank service charges 80
Deposit in transit 2,195
NSF check 950
What is the adjusted balance on the bank reconciliation?

a. $14,470
b. $10,705
c. $15,095
d. $15,720
ANSWER: c
Bloom's: Applying
BUSPROG: Analytic
106. In the normal operation of business, you receive a check from a customer and deposit it into your checking
account. With your bank statement you are advised that this check for $775 is “NSF.” The bank also informs you
that due to the amount of activity on your business account the monthly service charge is $75. During a bank
reconciliation, you will
a. subtract both values from balance according to bank
b. add both values to balance according to books
c. add both values to balance according to bank
d. subtract both values from balance according to books
ANSWER: d
Bloom's: Applying
BUSPROG: Analytic
107. A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account
would include a
a. credit to Petty Cash for $29
b. debit to Cash for $83
c. debit to Cash Over and Short for $13
d. credit to Cash for $54
ANSWER: c
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
would include a
a. credit to Petty Cash for $120
b. debit to Cash for $120
c. credit to Cash Over and Short for $3
d. credit to Cash for $102
ANSWER: c
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
109. Entries are made to the petty cash account when

a. making payments out of the fund
b. recording shortages in the fund
c. replenishing the petty cash fund
d. establishing the fund
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
110. The type of account and normal balance of Petty Cash is a(n)
a. revenue, credit
b. asset, debit
c. liability, credit
d. expense, debit
ANSWER: b
DIFFICULTY: Easy
BUSPROG: Analytic
111. The debit recorded in the journal to reimburse the petty cash fund is to
a. Petty Cash
b. Accounts Receivable
c. Cash
d. various accounts for which the petty cash was disbursed
ANSWER: d
DIFFICULTY: Easy
BUSPROG: Analytic
would include a credit to
a. Cash for $20
b. Cash Over and Short for $3
c. Petty Cash for $190
d. Cash for $180
ANSWER: d
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
113. Cash equivalents include

a. checks
b. coins and currency
c. money market accounts and commercial paper
d. stocks and short-term bonds
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
114. Cash equivalents

a. are illegal in some states
b. will be converted to cash within two years
c. will be converted to cash within 90 days
d. will be converted to cash within 120 days
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
115. A minimum cash balance required by a bank is called

a. cash in bank
b. a cash equivalent
c. a compensating balance
d. an EFT
ANSWER: c
DIFFICULTY: Easy
BUSPROG: Analytic
116. Which of the following would not be included with the cash and cash equivalents on the balance sheet?
a. commercial paper
b. short-term receivables
c. certificates of deposit
d. money market mutual funds
ANSWER: b
BUSPROG: Analytic
117. Pilger Corporation has cash on hand at year-end of $201,000 and a negative cash flow from operations of $144,000.
What is the ratio of cash to monthly cash expenses?
a. 12.0 months
b. 7.2 months
c. 1.4 months
d. 16.8 months
ANSWER: d
DIFFICULTY: Easy
Bloom's: Applying
ACCREDITING STANDARDS: ACCT.ACBSP.APC.23 - Financial Statement Analysis
BUSPROG: Analytic
118. During the year, Tempo Inc. has monthly cash expenses of $115,000. On December 31, its cash balance is
$1,437,500. The ratio of cash to monthly cash expenses is
a. 8.0
b. 12.5
c. 87.5
d. 11.5
ANSWER: b
DIFFICULTY: Easy
Bloom's: Applying
ACCT.ACBSP.APC.23 - Financial Statement Analysis
BUSPROG: Analytic
119. Identify each of the following as relating to (a) the control environment, (b) risk assessment, or (c)
control procedures.
1. Mandatory vacations
2. Personnel policies
3. Report of outside consultants on future market changes
ANSWER: 1. (c) control procedures

2. (a) the control environment
3. (b) risk assessment
DIFFICULTY: Easy
BUSPROG: Analytic
120. List the objectives of internal control and give an example of how each is implemented.
ANSWER: Internal control provides reasonable assurance that

(1) assets are safeguarded and used for business purposes
(2) business information is accurate
(3) employees and managers comply with laws and regulations
Examples are
(1) duties are separated
(2) duties are rotated
(3) reports are submitted to management
There are many other examples that would be correct.

DIFFICULTY: Easy
Bloom's: Understanding
BUSPROG: Analytic
121. You began your new job as the accountant at Bolivar Industries during the month of December. During your
first month, you found several interesting issues.
1) While looking through the invoices, you found Invoices 213–242, 245–271, and 275–290. It appears that invoices
243, 244, 272, 273, and 274 are missing.
2) During the month, Clerk # 3 issued $250 in refunds as compared to Clerks #1, #2, and #4 who issued less than $50
each.
3) The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month.
4) Business is generally brisk during the holiday season, but two weeks before Christmas there was a
sudden increase in slow payments.
Part A: What kind of warning signs could be associated with these issues?
Part B: What control could you put in place regarding cash refunds mentioned in Part A (2)?
ANSWER: Part A:
1) Missing invoices or gaps in transaction numbers could mean that the invoices
are being used for fraudulent transactions.
2) An unusually high number of refunds for Clerk #3 could mean that

the individual is creating fictitious refunds and pocketing the cash.
3) The difference could mean that receipts are being pocketed before being
deposited. Maybe there is a person responsible for making the deposits
on Tuesdays that is the culprit.
4) A sudden increase in slow payments could mean that an employee

is pocketing the payments.
Part B:
Surveillance cameras at customer service area.
Place supervisor as a second authorizer on refund transactions.
Prohibit cash refunds and require exchanges of merchandise instead.
Provide employee training.
Incorporate special alerts for critical dollar thresholds through company software.
Require information about the original transaction to be part of the refund process.
Bloom's: Analyzing
BUSPROG: Analytic
122. Two features of internal control are presented in the following sections. Each is followed by a list of four
irregularities that occurred in processing data. Identify the one irregularity from each list that would be
discovered or prevented by the feature of internal control described.
(a) The sum of the balances of the accounts in the customer's ledger is compared at the end
of each month with the balance of the accounts receivable account in the general ledger
by a person who has no responsibility for maintaining either the general ledger or the
customer’s ledger.
(1) Five hours of services were rendered but the customer was only billed for four hours.
(2) A cash receipt of $750 was recorded correctly in the accounts receivable controlling
account but was posted to the customer's ledger as $75.
(3) A bill for services rendered to Cole Co. was erroneously posted to the account of
Coleman Co. in the customer's ledger.
(4) No entry was made in the accounting records for services rendered to a customer.
(b) Both cash and credit charges for services rendered are recorded on prenumbered invoices.
At the end of the day, all invoices are accounted for before the duplicate copies of the
invoices are routed to the accounting department for entry into the accounts and the cash is
sent to the cashier's department for deposit.
(1) Some charge customers complained that the monthly statements of account did
not add all amounts correctly.
(2) Some clerks used incorrect hourly rates in preparing invoices.
(3) Some clerks destroyed duplicate copies of cash invoices and misappropriated the cash.
(4) Some charge customers complained that the monthly statement of account did
not indicate credits for payments made.
ANSWER: (a) (2)
(b) (3)
BUSPROG: Analytic
123. List and define each of the five elements of internal control.
ANSWER: (1) Control Environment. The control environment is the overall attitude of
management and employees about the importance of internal controls.
(2) Risk assessment. Risk assessment is the identification of risks faced by an
organization so that management can take necessary actions to control them.
(3) Control Procedures. The control procedures are the policies and procedures
designed to provide reasonable assurance that the business goals are met and
fraud is prevented.
(4) Monitoring. Monitoring locates deficiencies in the internal control system
and improves control effectiveness.
(5) Information and Communication. Information and communication to
management about the control environment, risk assessment, control
procedures, and monitoring elements of internal control are needed by
management to guide operations and ensure compliance with reporting, legal,
and regulatory requirements.
DIFFICULTY: Easy
BUSPROG: Analytic
124. The following procedures were recently implemented at the Health Station, Inc. For each procedure, indicate
whether the internal control over cash represents (1) a strength or (2) a weakness. If it is a weakness, please
explain why.
(a) All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares
a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in
the accounts.
(b) The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting
documentation is forwarded to the treasurer’s office for approval.
(c) At the end of each day, all cash receipts are placed in the bank’s night depository.
(d) The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.
ANSWER: (a) This is a weakness. The mail clerk should prepare an initial listing of
cash remittances before forwarding the cash receipts to the cashier. This
establishes initial accountability for the cash receipts. The mail clerk
should forward a copy of the listing of remittances to the accounts
receivable clerk for recording in the accounts.
(b) This is a strength.
(c) This is a strength.
(d) This is a weakness. The bank reconciliation should be prepared by

someone not involved with the handling or recording of cash.
Bloom's: Analyzing
FNMN.WARD.16.07-03 - LO: 07-03
BUSPROG: Analytic
125. The following procedures were recently implemented at the Pampered Pets, Inc. For each procedure, indicate
whether the internal control over cash represents (1) a strength or (2) a weakness. If it is a weakness, please
explain why.
(a) At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages
in their registers.
(b) At the end of the day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with
the deposit receipt obtained from the bank.
(c) After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the
check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher
and supporting documentation to the accounts payable clerk for filing.
(d) Along with the petty cash receipts for postage, office supplies, etc., several postdated
employee checks are in the petty cash fund.
ANSWER: (a) This is a weakness. Requiring cash register clerks to make up any cash
shortages from their own funds gives the clerks an incentive to shortchange
customers. That is, the clerks will want to make sure that they don’t have a
shortage at the end of the day. In addition, one might also assume that the
clerks can keep any overages. This would again encourage clerks to
shortchange customers. The shortchanging of customers will create
customer complaints, etc. The best policy is to report any cash shortages or
overages at the end of each day. If there is consistently a cash short or over,
then corrective action (training, removal, etc.) could be taken.
(b) This is a strength.
(c) This is a strength.
(d) This is a weakness. Employees should not be allowed to use the petty cash
fund to cash personal checks. In any case, postdated checks should not be
accepted. In effect, postdated checks represent a receivable from the
employees.
Bloom's: Analyzing
FNMN.WARD.16.07-03 - LO: 07-03
BUSPROG: Analytic
126. The following selected transactions relate to cash collections for a firm that maintains a $100 change fund at
all times. Present entries to record the transactions for each of the two days of cash receipts from sales.
(a) Actual cash in cash register, $5,412.36; cash receipts per cash register tally, $5,413.07.
(b) Actual cash in cash register, $3,712.95; cash receipts per cash register tally, $3,712.16.
ANSWER: (a)
Cash 5,412.36
Cash Short and Over 0.71
Sales 5,413.07
(b)
Cash 3,712.95
Sales 3,712.16
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
127. The actual cash received during the week ended June 6 for cash sales was $8,276 and the amount indicated by the
cash register total was $8,262. Journalize the entry to record the cash receipts and cash sales.
Journal
Date Description Post. Ref. Debit Credit
ANSWER:
Journal
Post.
Date Description Ref. Debit Credit
June 16 Cash 8,276
Sales 8,262
Cash Short and Over 14
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
128. The actual cash received during the week ended October 31 for cash sales was $23,447 and the amount indicated
by the cash register total was $23,457. Journalize the entry to record the cash receipts and cash sales.
Journal
ANSWER:
Journal
Post.
Date Description Debit Credit
Ref.
Oct. 31 Cash 23,447
Sales 23,457
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
129. Consider the following information from the cash account. Assume cash payments were 84% of collections.
Cash
?? Beg. balance
?? Disbursements
$80,275 End balance
ANSWER: $245,000 × 84% = $205,800
Beg. Cash = $41,075 ($80,275 + $205,800 – $245,000)

DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
130. Describe the features of a voucher system and list typical supporting documents for a voucher.
ANSWER: A voucher system is used to control cash payments. It should provide reasonable
assurance that only authorized payments are made and that all cash discounts are
taken.
Specifically, a voucher system is a set of procedures for authorizing and

recording liabilities and cash payments. Typical supporting documents for a
voucher are a supplier's invoice, a purchase order, and a receiving report.
After a voucher is prepared, it is submitted for approval. Once approved, the

voucher is recorded in the accounts and filed by due date. Upon payment, the
voucher is recorded in the same manner as the payment of an account payable.
DIFFICULTY: Easy
LEARNING OBJECTIVES: ACCT.WARD.16.LO: 8-03 - LO: 8-03
BUSPROG: Analytic
131. The actual cash received during the week ended June 7 for cash sales was $18,632, and the amount indicated by
the cash register total was $18,628. Journalize the entry to record the cash receipts and cash sales.
Journal
Post.
ANSWER:
Journal
Post.
June 7 Cash 18,632
Sales 18,628
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
132. Consider the following journal entry made by Jones Company for one day's sales of a single cashier. Upon
investigation, what might you find happened to create this amount of Cash Over/Short account difference?
Give three possible reasons for this difference.
Cash 2,235.00
Sales 2,135.00
ANSWER: There are many possibilities, but the most likely culprits are as follows:
1. The beginning change fund in the drawer was not considered.

2. A collection of an A/R could have not been recorded, making the cash “heavy” to
sales.
3. A customer may have used a debit card and requested $100 cash back that
was not given to the customer (expect a call from the customer).
4. A sale for the exact amount of $100 was not recorded into the sales of the
cash register. However, this is a VERY improbable occurrence.
5. A void could have taken place and the cash not refunded or possibly not
removed. In this case, you would certainly investigate the voided items and
the actions of the cashier as well as the history of cash reconciliations for this
cashier.
Bloom's: Analyzing
ACCT.AICPA.BB.07 - Critical Thinking
BUSPROG: Analytic
133. List the principal advantages of electronic funds transfers.
ANSWER: EFTs cost less than receiving cash payments through the mail.
EFTs enhance internal controls over cash, since the cash is received
directly by the bank without any employees handling cash.
EFTs reduce late payments from customers and speed up the processing
of cash receipts.
DIFFICULTY: Easy
ACCT.AICPA.FN.02 - Leveraging Technology
BUSPROG: Technology
134. You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or
decrease your company’s bank account balance. Complete the following table to help your new staff understand.
Debit Increases or
or Decreases the
Credit Company’s Bank
ITEM Memo Account Balance
EFT payment
Bank correction of an error due to posting another
customer’s check to your account
Service charge
Note and interest collected for our company
NSF check
Bank correction of an error recording a $250
deposit as $520
EFT deposit
ANSWER:
Debit Increases or
or Decreases the
Credit Company’s Bank
ITEM Memo Account Balance
EFT payment Debit Decrease
Bank correction of an error due to
posting another customer’s check to
your account Credit Increase
Service Charge Debit Decrease
Note and interest collected for our
company Credit Increase
NSF check Debit Decrease
Bank correction of an error recording
a $250 deposit as $520 Debit Decrease
EFT deposit Credit Increase
Bloom's: Applying
BUSPROG: Analytic
135. The following items may appear on a bank statement:

1. NSF check
2. EFT deposit
3. Service charge
4. Bank correction of an error from recording a $300 check as $30.
Indicate whether the item would appear as debit or credit memo on the bank statement and whether the item would
increase or decrease the balance of your account. Use the following format:
Appears on the
Bank Statement as a Increases (Decreases) the
a Debit or Credit Balance of the Company’s
Item No. Memo Bank Account
ANSWER: Appears on the

Bank Statement as a Increases (Decreases) the
a Debit or Credit Balance of the Company’s
Item No. Memo Bank Account
1. Debit memo Decreases
2. Credit memo Increases
3. Debit memo Decreases
4. Credit memo Increases
DIFFICULTY: Easy
BUSPROG: Analytic
136. The following information is from Madison Corporation’s accounting records for May. Check #3269 was
returned as a double payment and voided. Checks that have not cleared the bank include #3252, #3260, and series
#3275–3278.
Check # Amount Check # Amount

3247 $ 32.64 3263 $ 24.87
3248 400.00 3264 45.00
3249 309.22 3265 33.78
3250 256.00 3266 756.77
3251 3,212.17 3267 84.34
3252 56.89 3268 789.00
3253 98.02 3269 48.90
3254 47.55 3270 34.41
3255 1,124.77 3271 872.00
3256 250.00 3272 22.00
3257 68.00 3273 562.38
3258 215.56 3274 512.00
3259 38.55 3275 603.50
3260 92.65 3276 67.00
3261 44.61 3277 301.61
3262 72.96 3278 47.88
In addition to the above list of the checks, Madison had check #2264 for $32.98 and check #2655 for $45.99
outstanding previously that have not cleared.
1. Create an outstanding checks list for Madison at the end of May.
2. What is the total amount of checks that cleared the bank (written in May)?
ANSWER: 1.
Madison Company
May 31
Outstanding Checks List
Check # Amount
2264 $ 32.98
2655 45.99
3252 56.89
3260 92.65
3275 603.50
3276 67.00
3277 301.61
3278 47.88
Total $1,248.50
2. Students must remember to not include the voided Check #3269.
Check # Amount
3247 $ 32.64
3248 400.00
3249 309.22
3250 256.00
3251 3,212.17
3253 98.02
3254 47.55
3255 1,124.77
3256 250.00
3257 68.00
3258 215.56
3259 38.55
3261 44.61
3262 72.96
3263 24.87
3264 45.00
3265 33.78
3266 756.77
3267 84.34
3268 789.00
3270 34.41
3271 872.00
3272 22.00
3273 562.38
3274 512.00
Total $9,906.60
Bloom's: Applying
BUSPROG: Analytic
137. The Scharf Company is a retailer located in a state without sales tax. The following data was given to you to
complete the transactions for the day’s sales to be recorded. All cash drawers start with $100 in change.
Reg. #1 Reg. #2 Reg. #3 Reg. #4
Cash in drawer $974.50 $1,383.66 $939.46 $1,137.91
Sales reading $879.50 $1,298.16 $839.46 $1,030.33
Difference
Record the journal entries for EACH cash register to determine the cashier’s accuracy.
Account Debit Credit
ANSWER: Each cash drawer starts with $100. This must be subtracted from the total cash
in drawer to determine the cash over/short amount.
Reg. # Debit Credit

1 Cash 874.50
Sales 879.50
2 Cash 1,283.66
Sales 1,298.16
3 Cash 839.46
Sales 839.46
Cash 4 1,037.91
Sales 1,030.33
Bloom's: Applying
BUSPROG: Analytic
138. Jackson Industries has collected the following information but needs assistance completing the table. The
cash payments were 90% of collections.
Cash
?? Beg. balance
?? Payments
$102,275 End balance
ANSWER:
Cash
$51,098 Beg. balance
$460,593 Payments
$102,275 End balance
Calculations:
$511,770 × 90% = Payments of $460,593
Beginning balance + Collections – Payments = Ending balance
Beg. Cash = $51,098 ($102,275 + $460,593 – $511,770)
Bloom's: Applying
BUSPROG: Analytic
139. Identify each of the following reconciling items as (a) an addition to the cash balance according to the bank
statement, (b) deduction from the cash balance according to the bank statement, (c) an addition to the cash balance
according to the company’s records, or (d) a deduction from the cash balance according to the company’s records.
Assume that none of the transactions reported by bank debit and credit memos have been recorded by the
company. Also, indicate by writing "entry" by those items that will require a journal entry in the company’s
accounts.
1. Deposits in transit.
2. Bank service charges.
3. NSF check.
4. Outstanding checks.
5. Check for $690 incorrectly recorded by the company as $960.
6. Check for $420 incorrectly recorded by the company as $240.
ANSWER: 1. (a) an addition to the cash balance according to the bank

statement
2. (d) a deduction from the cash balance according to the
company’s records (entry)
4. (b) deduction from the cash balance according to the bank
statement
5. (c) an addition to the cash balance according to the company’s
records (entry)
Bloom's: Applying
BUSPROG: Analytic
140. Using the following information, prepare a bank reconciliation for Miller Co. for August 31:
(a) The bank statement balance is $4,690
(b) The cash account balance is $5,080.
(c) Outstanding checks amounted to $715.
(d) Deposits in transit are $1,020.
(e) The bank service charge is $40.
(f) A check for $72 for supplies was recorded as $27 in the ledger.
ANSWER:
Miller Co.
Bank Reconciliation
August 31
Cash balance according to bank statement $4,690
Add deposits in transit not recorded by bank 1,020
$5,710
Deduct outstanding checks 715
Adjusted balance $4,995
Cash balance according to company's records $5,080

Deduct: Bank service charge $40
Error in recording 45 85
Bloom's: Applying
BUSPROG: Analytic
141. Using the following information, prepare a bank reconciliation for Candace Co. for May 31:
(a) The bank statement balance is $2,936.
(d) Deposits in transit are $655.
ANSWER:
Candace Co.
Bank Reconciliation
May 31
Add deposits in transit not recorded by bank 655
$3,591
Deduct outstanding checks 465

Deduct: Bank service charge $50
Error in recording check 18 68
Bloom's: Applying
BUSPROG: Analytic
142. Bank reconciliation information for Kaden Co. for May 31 is as follows:
(a) The bank statement balance is $2,936.
(d) Deposits in transit are $655.
Record the appropriate journal entry for Kaden Co.
ANSWER: Miscellaneous Administrative Expense 50

Supplies 18
Cash 68
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
143. The bank statement for Farmer Co. indicates a balance of $7,735.00 on June 30. After the journals for June had
been posted, the cash account had a balance of $4,098.00. Prepare a bank reconciliation on the basis of the
following reconciling items:
(a) Cash sales of $742 had been erroneously recorded in the cash receipts journal as $724.
(b) Deposits in transit not recorded by bank, $425.
(c) Bank debit memo for service charges, $35.
(d) Bank credit memo for note collected by bank, $2,475 including $75 interest.
(e) Bank debit memo for $256 NSF (not sufficient funds) check from Janice Smith, a customer.
(f) Checks outstanding, $1,860.
ANSWER:
Farmer Co.
Bank Reconciliation
June 30
Add deposits in transit not recorded by bank 425
$8,160
Deduct outstanding checks 1,860

Add: Note collected by bank, including $75 interest $2,475
Error in recording cash sales of $742 ad $724 18 2,493
$6,591
Deduct: NSF check from Janice Smith $ 256
Bank service charges 35 291
Bloom's: Applying
BUSPROG: Analytic
144. Accompanying a bank statement for Marsh Land Properties is a credit memo for payment on a $15,000 1-year
note receivable and $900 of interest collected by the bank. Marsh Land Properties had been notified by the bank
at the time of collection, but had made no entries. Journalize the entry that should be made by Marsh Land to
bring the accounting records up to date.
ANSWER: Cash 15,900
Notes Receivable 15,000
Interest Revenue 900
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
145. For each of the following, explain whether the issue would require you to prepare a journal entry for your
company, assuming any original entry is correct. If an entry is required, please include it as part of your answer.
(1) The bank recorded your deposit as $91 rather than the actual amount of $191.
(2) Two outstanding checks amounted to $450.
(3) Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $50 instead
of $59.
(4) The bank paid a check for $500 after the company had issued a stop payment and voided the check.
(5) An EFT deposit was made by one of the company’s customers, Atlas Design, for merchandise received. The sale
had previously been recorded when shipped and was equal to the payment amount of $125.
ANSWER: (1) If you recorded the deposit correctly in your company’s books, then no
additional journal entry is required.
(2) Since your company has already recorded these checks correctly,
no additional journal entry is required by your company.
(3) A journal entry is required by the company to correct the books. In this
case, the company would record:
Postage Expense 9
Cash 9
(4) The bank is at fault here and no additional journal entry is required by
the company.
(5) Since the company has to be notified by the bank when direct deposits
occur, the company will need to make a journal entry. This entry would be:
Cash 125
Accounts Receivable, Atlas Design 125
BUSPROG: Analytic
146. The following data were gathered to use in reconciling the bank account of Savannah Company:

Deposit in transit 2,195
NSF check 950
What is the adjusted balance on the bank reconciliation?
ANSWER: $15,095 ($16,750 + $2,195 – $3,850) or ($16,125 – $80 – $950)

Bloom's: Applying
BUSPROG: Analytic
147. The following data were gathered to use in reconciling the bank statement of Build-A-Lot:

Deposits in transit 4,100
NSF checks 775
(1) What is the adjusted balance on the bank reconciliation?

(2) Journalize any necessary entries for Build-A-Lot based on the bank reconciliation.
ANSWER: (1) $13,155

Bank section reconciliation: $14,355 + $4,100 – $5,300 = $13,155
Company section of reconciliation: $14,010 – $80 – $775 = $13,155
(2)
Accounts Receivable 775
Miscellaneous Adm. Expense 80
Cash 855
Bloom's: Applying
BUSPROG: Analytic
148. Roper Electronics received its bank statement for the month of August with an ending balance of $11,740. Roper
determined that check #613 for $155 and check #601 for $420 were both outstanding. Also, a $6,900 deposit for
August 30 was in transit as of the end of the month. Northern Regional Bank also collected a $5,000 notes
receivable on August 1 that was issued March 1. Accrued interest is $250. Northern Regional Bank charged a $35
fee for the collection service. The bank statement reveals a bank service charge of $20. A customer check for $68
was returned with the bank statement marked “NSF.” The ending balance of the Roper cash account is $12,938.
Prepare a bank/account reconciliation and any necessary journal entries for the reconciliation.
ANSWER:
Add deposits in transit 6,900
$18,640
Deduct outstanding checks:
No. 601 $420
No. 613 155 575
Cash balance according to Roper Electronics $12,938

Add note and interest collected by bank 5,250
$18,188
Deduct: Check returned because of insufficient $ 68
funds
Collection fee 20
Monthly account fee 35 123
Aug. 31 Cash 5,215

Bank Service Charge Expense 35
31 Bank Service Charge Expense 20

Cash 20
31 Accounts Receivable 68
Cash 68
Bloom's: Applying
BUSPROG: Analytic
149. Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end of month
balance by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the
statement period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley
collected a $4,000 note receivable plus $240 of interest revenue. The bank charges $20 for the collection
service. The bank charges a monthly account fee of $35. The end-of-month balance per company books is
$11,135.
Prepare a bank/account reconciliation and write any necessary journal entries for the reconciliation.
ANSWER:
Add deposits in transit, not recorded by bank 4,250
$15,487
Deduct outstanding checks
$ 87
105
95 287
Cash balance according to Comstock Industries $11,135

Add note and interest collected by bank 4,120
$15,255
Deduct: Collection fee $ 20
Bank service charge 35 55
Jul. 31 Cash 4,100.00

Bank Service Charge Expense 20.00
Notes Receivable 4,000.00
Interest Revenue 120.00
31 Bank Service Charge Expense 35.00

Cash 35.00
Bloom's: Applying
BUSPROG: Analytic
150. The cash account for Santiago Co. on May 31 indicated a balance of $20,915. The March bank statement
indicated an ending balance of $25,645. Comparing the bank statement, the canceled checks, and the
accompanying memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $5,975.
b. A deposit of $3,796 had been made too late to appear on the bank statement.
c. A check for $1,482 returned with the statement had been incorrectly recorded as $482. The check was
originally issued to pay on account.
d. The bank collected $4,515 on a note left for collection of which $515 was interest revenue.
e. Bank service charges for May amounted to $70.
f. A check for $894 was returned by the bank because of insufficient funds.
Prepare a bank reconciliation as of May 31. Journalize the necessary entries.
Santiago Co.
Bank Reconciliation
May 31
Journal
ANSWER:
Santiago Co.
Bank Reconciliation
May 31
Add deposits not recorded by bank 3,796
$29,441
Deduct outstanding checks 5,975
Cash balance according to company’s records $20,915

Add proceeds of note and interest collected by bank 4,515
$25,430
Deduct error in recording check $1,000
Nonsufficient funds check 894 1,964
Journal
Post.
May 31 Cash 4,515
Note Receivable 4,000
31 Accounts Payable 1,000

Bank Service Charge Expense 70
Accounts Receivable 894
Cash 1,964
Bloom's: Applying
BUSPROG: Analytic
151. The bank statement for Jeffrey Co. indicates a balance of $8,785 on October 31. After the journals for October
had been posted, the cash account had a balance of $8,998.
(d) Bank credit memo for note collected by bank, $23,985 plus $885 interest.
(e) Bank debit memo for $756 NSF (not sufficient funds) check from Calin Sams, a customer.
Record the appropriate journal entries that would be necessary for Jeffrey Co.
ANSWER:
Cash 25,320
Sales 450
Accounts Receivable, Calin Sams 756

Miscellaneous Administrative Expense 40
Cash 796
Bloom's: Applying
BUSPROG: Analytic
152. The bank statement for Gatlin Co. indicates a balance of $7,735 on June 30. After the journals for June had been
posted, the cash account had a balance of $4,098.
(d) Bank credit memo for note collected by bank, $2,475 including $75 interest.
(e) Bank debit memo for $256 NSF (not sufficient funds) check from Janice Smith, a customer.
Record the appropriate journal entries that would be necessary for Gatlin Co.
ANSWER: Cash 2,493

Interest Revenue 75
Sales 18
Accounts Receivable—Janice Smith 256

Miscellaneous Administrative Expense 35
Cash 291
Bloom's: Applying
BUSPROG: Analytic
153. Journalize the entries to record the following:

March 1 Established a petty cash fund of $300.
March 31 The amount of cash in the petty cash fund is now $64. The fund is replenished
based on the following receipts: office supplies, $137; selling expenses, $112.
Record any discrepancy in the cash short and over account.
Journal
Post.
ANSWER:
Post.
Mar. 1 Petty Cash 300
Cash 300
31 Office Supplies 137

Selling Expenses 112
Cash 236
Bloom's: Applying
BUSPROG: Analytic
154. On April 2, Granger Sales decides to establish a $125.00 petty cash fund to relieve the burden on Accounting.
(a) Journalize the establishment of the fund.
(b) On April 10, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of
$29.50, meals and entertainment of $38.25, and $13.55 in cash. Journalize the replenishment of the fund.
(c) On April 11, Granger Sales decides to increase petty cash to $200.00. Journalize this event.
ANSWER:
(a) Apr. 2 Petty Cash 125.00
Cash 125.00
(b) 10 Mail and Postage Expense 43.50

Contributions and Donations Expense 29.50
Meals and Entertainment Expense 38.25
Cash 111.45
(c) 11 Petty Cash 75.00

Cash 75.00
Bloom's: Applying
BUSPROG: Analytic
155. The last custodian of the petty cash fund was hospitalized and you have been asked to take stock of the fund and
replenish it. When you receive the fund, it has $299 in cash and receipts as follows:
Office supplies $295
Advertising 120
Transportation by Taxi 75
The petty cash fund was established to have $800 in it.
Based on what you have found, what journal entry should be recorded to replenish the fund?
ANSWER: Office Supplies 295

Advertising Expense 120
Transportation Expense 75
Cash 501
Bloom's: Applying
BUSPROG: Analytic
June 1 Established a petty cash fund of $200.

30 The amount of cash in the petty cash fund is now $57. The fund is replenished based on the
following receipts: postage, $25; entertainment, $100; and miscellaneous, $20.
Journal
ANSWER:
Post.
June 1 Petty Cash 200
Cash 200
30 Postage Expense 25
Entertainment Expense 100
Miscellaneous Expense 20
Cash 143
Bloom's: Applying
BUSPROG: Analytic
157. On April 3, Snappy Sales decides to establish a $135.00 petty cash fund to relieve the burden on Accounting.
(a) Journalize the establishment of the fund.
(b) On April 11, the petty cash fund has receipts for mail and postage of $32.75, contributions and donations of
$25.25, meals and entertainment of $68.00, and $9.75 in cash. Journalize the replenishment of the fund.
(c) On April 12, Snappy Sales decides to increase petty cash to $175.00. Journalize this transaction.
ANSWER:
(a) Apr. 3 Petty Cash 135.00
Cash 135.00

Contributions and Donations
Expense 25.25
Meals and Entertainment
Expense 68.00
Cash 125.25
(c) 12 Petty Cash 40.00

Cash 40.00
Bloom's: Applying
BUSPROG: Analytic
158. Present entries to record the following transactions:

(a) Established a petty cash fund of $235.00.
(b) The petty cash fund now has a balance of $42.80. Replenished the fund, based on the
following disbursements as indicated by a summary of the petty cash receipts: office
supplies, $74.50; miscellaneous administrative expense, $92.75; and miscellaneous
selling expense, $18.60.
(c) Increased the petty cash fund to $300.00.
ANSWER: (a)
Petty Cash 235.00
Cash 235.00
(b)
Office Supplies 74.50
Miscellaneous Administrative
Expense 92.75
Miscellaneous Selling Expense 18.60
Cash 192.20
(c)
Petty Cash 65.00
Cash 65.00
Bloom's: Applying
BUSPROG: Analytic
159. On August 3, Sonar Sales decides to establish a $275.00 Petty Cash Account to relieve the burden on Accounting.
(a) Journalize the establishment of this fund.
(b) On August 11, the petty cash fund has receipts for mail and postage of $124.75, contributions and
donations of $53.25, meals and entertainment of $63.85, and $32.75 in cash. Journalize the replenishment
of the fund.
(c) On August 12, Sonar Sales decides to increase petty cash to $400.00. Journalize this transaction.
ANSWER: (a) Aug. 3 Petty Cash 275.00

Cash 275.00

Contributions and Donations Expense 53.25
Meals and Entertainment Expense 63.85
Cash 242.25
(c)
12 Petty Cash 125.00
Cash 125.00
Bloom's: Applying
BUSPROG: Analytic
160. Stephanie Jo Company established a petty cash fund of $300 on May 1. At the end of the month, the petty cash
fund has $42 in cash and receipts for postage, $39; entertainment, $146; and office supplies of $70.
Prepare the needed journal entries, recording any discrepancy in the cash short and over account.
Journal
ANSWER:
Journal
Post.
Date Description Debit Credit
Ref.
May 1 Petty Cash 300
Cash 300
30 Postage Expense 39
Entertainment Expense 146
Office Supplies 70
Cash 258
Bloom's: Applying
BUSPROG: Analytic

Sept. 1 Established a petty cash fund of $350.
30 The amount of cash in the petty cash fund is now $130. The fund is replenished based on the
following receipts: office supplies, $116; postage, $100.
Journal
ANSWER:
Journal
Post.
Sept. 1 Petty Cash 350
Cash 350
30 Office Supplies 116

Postage Expense 100
Cash Short & Over 4
Cash 220
Bloom's: Applying
BUSPROG: Analytic
162. (a) Where are cash equivalents disclosed in the financial statements?
(b) List three examples of cash equivalents.
ANSWER: (a) Cash account on the balance sheet

(b) Money market funds; notes of major corporations (commercial paper); and
U. S. Treasury bills
DIFFICULTY: Easy
BUSPROG: Analytic
163. You began your new job as the accountant for Morton Company. You were surprised to find that the company
had a $2,000 petty cash fund, which sits in the break room. The president of the company told you: “Our petty
cash system here works quite smoothly. Since everyone is honest here, everyone has access to the fund for
incidentals that might pop up in the course of the business day. Most of these situations don’t have any receipts
tied to them, so I just put the money back in the fund when my secretary tells me that we have run out of petty
cash and we debit the amount to Miscellaneous Expense.”
(a) Should you implement some controls on petty cash? Why?

(b) If so, what controls could be used for petty cash?
ANSWER: (a) Even though the president thinks the petty cash system works well, $2,000 is a
tempting sum for theft. Even with only $2,000, if the fund is replenished
frequently, a significant amount of cash could be stolen. For example, if the
fund is replenished weekly, then $104,000 ($2,000 × 52 weeks) could be subject
to theft. The issue of debiting the amount used to Miscellaneous Expense is a
questionable practice that would typically be flagged by the independent
auditor.
(b) Controls for petty cash include (1) designating one person who is responsible for
the fund, (2) maintaining a written record of all payments, (3) requiring support
(receipts) for payments from the fund, and (4) periodic review by an
independent person of the funds on hand and the payments made by an
independent person.
Bloom's: Analyzing
BUSPROG: Analytic
164. Why would a bank require a company to maintain a compensating balance?
ANSWER: Usually a compensating balance is part of a loan agreement or line of credit.

DIFFICULTY: Easy
BUSPROG: Analytic
165. The Garden Gate, Inc. reported the following data in its August 31 annual report.
Cash and cash equivalents $ 485 625
Cash flow from operations (630,000)
(a) What is the company’s “cash burn” per month?

(b) What is the company’s ratio of cash to monthly cash expenses?
(c) Interpret the ratio you computed in part 2. What are the implications for The Garden Gate, Inc.?
ANSWER: (a) $630,000/12 = $52,500 per month
(b) $485,625/52,500 = 9.3 months
(c) The ratio of cash to monthly cash expenses means that as of August 31,
The Garden Gate, Inc. will run out of cash in 9.3 months unless it changes
its operations, sells investments, or raises additional financing.
Bloom's: Analyzing
BUSPROG: Analytic
166. The following data is from the Muffin Shoppe for the past four years.
Year Ending December 31

Year 1 Year 2 Year 3 Year 4
Cash & cash equivalents 38,788 65,216 70,691 78,274
Cash flow from operations (39,264) (50,580) (45,768) (57,744)
Calculate the following:

Monthly cash expenses
Ratio of cash to monthly
cash Expenses
ANSWER:
Monthly cash
expenses $3,272 $4,215 $3,814 $4,812
Ratio of cash to
monthly cash
expenses 11.85 15.47 18.53 16.27
Bloom's: Applying
BUSPROG: Analytic
167. Farm Store, Inc. reported the following data in its December 31 annual report.
Cash and cash equivalents $1,050,000

Negative cash flows from operations (420,000)

(c) Interpret the ratio you computed in part 2. What are the implications for Farm Store, Inc.?
ANSWER: (a) $420,000/12 = $35,000 per month

(b) $1,050,000/35,000 = 30
(c) The ratio computed in part 2 means that as of December 3,1 Farm Store,
Inc. will run out of cash in 2 1/2 years unless it changes its operations,
sells investments, or raises additional financing.
Bloom's: Analyzing
BUSPROG: Analytic
168. Aspen, Inc. reported the following data in its annual report:
Cash and cash equivalents $ 460,000

(1) What is the company’s “cash burn” per month?

(2) What is the company’s ratio of cash to monthly cash expenses?
ANSWER: (1) $240,000/12 = $20,000 per month

(2) $460,000/$20,000 = 23 months
DIFFICULTY: Easy
Bloom's: Applying
BUSPROG: Analytic
169. The following data is from the Autumn Company for the past four years.

Cash & cash equivalents $ 23,788 $ 45,776 $ 52,899 $ 82,744
Cash flow from operations (32,556) (47,880) (32,357) (16,450)
Calculate the following:

Monthly cash expenses
Ratio of cash to monthly cash expenses
ANSWER:
Monthly cash expenses $2,713 $3,990 $2,696 $1,371
Ratio of cash to monthly cash 8.8 11.5 19.6 60.4
expenses months months months months
Bloom's: Applying
ACCT.ACBSP.APC.23 - Financial Statement Analysis
ACCT.AICPA.BB.06 - Resource Management
BUSPROG: Analytic
170. Groceries R Us, Inc. reported the following data in its annual report.
Cash and cash equivalents $2,280,000


(c) Interpret the ratio you computed in part 2. What are the implications for Groceries R Us, Inc.?
ANSWER: (1) $240,000/12 = $20,000 per month

(2) $2,280,000/$20,000 = 114 months
(3) The ratio computed in part 2 means that Groceries R Us, Inc. will run out
of cash in 9.5 years unless it changes operations, sells investments, or
raises additional funding.
Bloom's: Analyzing
BUSPROG: Analytic
Match the following elements of internal control:

a. provides reasonable assurance that business goals will be achieved
b. used by management for guiding operations and ensuring compliance with requirements
c. overall attitude of management and employees
d. used to locate weaknesses and improve controls
e. identify, analyze and assess likeliness of vulnerabilities
DIFFICULTY: Easy
BUSPROG: Analytic
171. control environment
ANSWER: c
172. risk assessment
ANSWER: e
173. control procedures
ANSWER: a
174. monitoring
ANSWER: d
175. information and communication
ANSWER: b
Match each item to a bank statement adjustment, a company books adjustment, or either.
a. bank statement adjustment
b. company books adjustment
c. either
BUSPROG: Analytic
176. Outstanding checks
ANSWER: a
177. NSF check
ANSWER: b
178. Error in recording a check
ANSWER: b
179. Bank charges
ANSWER: b
180. Note collected by the bank
ANSWER: b
181. Interest revenue
ANSWER: b
182. Deposit in transit
ANSWER: a
Assign the letter to indicate whether the following items would be added or subtracted from the company’s books or
the bank statement during the construction of a bank reconciliation.
a. added to the company’s books
b. subtracted from the company’s books
c. added to the bank statement balance
d. subtracted from the bank statement balance
BUSPROG: Analytic
183. outstanding checks
ANSWER: d
184. bank service charge
ANSWER: b
185. deposit in transit
ANSWER: c
186. NSF check
ANSWER: b
187. EFT deposit from a customer
ANSWER: a
188. charges for some other company’s safe deposit box were posted to your account
ANSWER: c
189. a $1,000 note from one of your customers was collected by the bank
ANSWER: a
190. interest revenue earned by the note above
ANSWER: a
Another random document with
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The affinities with the order Stolonifera are clearly seen in the genera
Xenia and Telesto. Some species of Xenia form flattened or domed
colonies attached to stones or corals, with non-retractile anthocodiae
and body-walls united for only a short distance at the base. Young
Xenia colonies are in fact Stolonifera in all essential characters. In
Telesto prolifera we find a network of stolons encrusting coral
branches and other objects after the manner of the stolons of many
species of Clavularia, although the zooids do not arise from these
stolons singly, but in groups, with their body-walls fused together for
a certain distance. In Telesto rubra the spicules of the body-walls are
fused together to form a series of perforated tubes very similar in
some respects to the tubes of Tubipora.
A remarkable genus is Coelogorgia. Here we find a branching colony

arising from a basal stolon, and the axis of the main stem and of
each branch consists of a single very much elongated zooid bearing
on its thickened walls the branches of the next series and other
zooids. It is true that in this genus there is very little fusion of
neighbouring zooids, and the amount of true coenenchym is so small
that it can hardly be said to exist at all. Bourne[373] has united this
genus with Telesto into a family Asiphonacea, which he joins with the
Pennatulida in the order Stelechotokea; but their affinities seem to
be closer with the Alcyonacea than with the Pennatulacea, from
which they differ in many important characters.
Fig. 154.—Alcyonium digitatum, a single-lobed specimen, with some of the
zooids expanded.
The genus Alcyonium not only contains the commonest British

Alcyonarian (A. digitatum), but it is one of the most widely distributed
genera of all Alcyonaria that occur in shallow water.
The genera Sarcophytum and Lobophytum occur in shallow water in

the tropics of the old world. The former frequently consists of huge
toad-stool shaped masses, soft and spongy in consistency, of a
green, brown, or yellow colour. On some reefs the colonies of
Sarcophytum form a very conspicuous feature, and from their very
slimy, slippery surface, add to the minor dangers of wading in these
regions. Both genera are dimorphic. Some species of the genus
Sclerophytum,[374] which occur in the Indian Ocean, are so hard and
brittle that they might readily be mistaken for a Zoantharian coral.
This character is due to the enormous number of tightly packed
spicules borne by the coenenchym. Some of these spicules in S.
querciforme are 7 mm. × 1.7 mm.; the largest, though not the longest
(vide p. 335) of any spicules occurring in the order.
Another very important genus occurring on coral reefs, and of very

wide distribution, is Spongodes. This genus forms bushy and rather
brittle colonies of an endless variety of beautiful shapes and colours.
Arising from the neck of each anthocodia there are one or two long,
sharp, projecting spicules, which give the surface a very spiny or
prickly character.
The genera Siphonogorgia and Chironephthya form large brittle,

branching colonies which might readily be mistaken for Gorgonians.
The strength of the branches, however, is mainly due to the large,
densely packed, spindle-shaped spicules at the surface of the
coenenchym, the long coelenteric cavities of the zooids penetrating
the axis of both stem and branches. Siphonogorgia is usually
uniformly red or yellow in colour. Chironephthya, on the other hand,
exhibits a great variety of colour in specimens from the same reef,
and indeed in different branches of the same colony.
Fam. 1. Xeniidae.—Alcyonacea with non-retractile zooids. Spicules

very small discs, usually containing a relatively small proportion of
lime.
Xenia, Savigny; Indian Ocean and Torres Straits. Heteroxenia,

Kölliker; Red Sea, Cape of Good Hope, and Torres Straits.
Fam. 2. Telestidae.—Colonies arising from an encrusting

membranous or branching stolon. The erect stem and branches are
formed by the body-walls of two or three zooids only, from which
secondary zooids and branches of the next order arise.
Telesto, Lamouroux, widely distributed in warm waters of the

Atlantic, Pacific, and Indian Oceans. The genus Fascicularia, Viguier,
from the coast of Algiers, seems to be related to Telesto, but the
groups of zooids are short, and do not give rise to branches.
Fam. 3. Coelogorgiidae.—The colony arborescent, attached by

stolon-like processes. The stem formed by an axial zooid with
thickened body-walls. Branches formed by axial zooids of the
second order, and branchlets by axial zooids of the third order, borne
either on two sides or in spirals by the main stem. Genus
Coelogorgia, Zanzibar.
Fam. 4. Alcyoniidae.—The colonies of this family are usually soft

and fleshy, and the spicules, evenly distributed throughout the
coenenchym, do not usually fuse or interlock to form a continuous
solid skeleton. They may be unbranched or lobed, never dendritic in
form. The principal genera are:—Alcyonium, Linnaeus,
cosmopolitan, but principally distributed in temperate and cold
waters. Alcyonium digitatum is the commonest British Alcyonarian. It
is found in shallow water, from the pools left at low spring tides to
depths of 40 or 50 fathoms, at most places on the British shores. It is
stated by Koehler to descend into depths of over 300 fathoms in the
Bay of Biscay. There are two principal varieties; one is white or pale
pink in the living condition, and the other yellow. In some localities
the two varieties may be found in the same pools. Another species,
Alcyonium glomeratum, placed in a distinct genus (Rhodophyton) by
Gray, and distinguished from the common species by its red colour
and long digitate lobes, is found only off the coast of Cornwall.
Paralcyonium, Milne Edwards; Mediterranean. Sclerophytum, Pratt;
sometimes dimorphic, Indian Ocean. Sarcophytum, Lesson;
dimorphic, principally tropical. Lolophytum, Marenzeller; dimorphic,
tropical. Anthomastus, Verrill; dimorphic, Atlantic Ocean, deep water.
Acrophytum, Hickson; dimorphic, Cape of Good Hope.
Fam. 5. Nephthyidae.—Colonies dendritic. Usually soft and flexible

in consistency. Nephthya, Savigny; Indian and Pacific Oceans.
Spongodes, Lesson; widely distributed in the Indian and Pacific
Oceans.
Fam. 6. Siphonogorgiidae.—Colonies often of considerable size.

Dendritic. Spicules usually large and abundant, giving a stiff, brittle
consistency to the stem and branches. Siphonogorgia, Kölliker; Red
Sea, Indian, and Pacific tropics. Chironephthya, Wright and Studer;
Indian and Pacific Oceans. Lemnalia, Gray; Zanzibar. Agaricoides,
Simpson;[375] Indian Ocean, 400 fathoms.
Order IV. Gorgonacea.

This order contains a very large number of dendritic and usually
flexible corals occurring in nearly all seas and extending from
shallow waters to the very great depths of the ocean. A large
proportion of them are brightly coloured, and as the principal
pigments are fixed in the spicules, and are therefore preserved when
the corals are dead and dried, they afford some of the most
attractive and graceful objects of a natural history museum.
The only character that separates them from the Alcyonacea is that
they possess a skeletal axis that is not perforated by the coelenteric
cavities of the zooids. The coelenteric cavities are usually short. The
order may conveniently be divided into two sub-orders.
Sub-Order 1. Pseudaxonia.
The axis in this sub-order consists of numerous spicules tightly
packed together, or cemented together by a substance which is
probably allied to horn in its chemical composition. This substance
may be considerable in amount, in which case it remains after
decalcification as a spongy, porous residue; or it may be so small in
amount, as in Corallium, that the axis appears to be composed of
solid carbonate of lime. The statement is usually made that the axis
is penetrated by nutritive canals in certain genera, but the evidence
upon which this is based is unsatisfactory and in some cases
unfounded. There can be no doubt, however, that in some genera
the axis is porous and in others it is not, and this forms a useful
character for the separation of genera.
Fam. 1. Briareidae.—The medullary substance consists of closely

packed but separate spicules embedded in a soft horny matrix,
which is uniform in character throughout its course. Nearly all the
genera form dendritic colonies of considerable size.
The principal genera are:—Solenocaulon, Gray; Indian Ocean and

North Australia. Many of the specimens of this genus have fistulose
stems and branches. The tubular character of the stem and
branches is probably caused by the activity of a Crustacean,
Alpheus, and may be regarded as of the nature of a gall-formation.
[376] Paragorgia, M. Edwards; Norwegian fjords, in deep water. This
genus forms very large tree-like colonies of a ruby-red or white
colour. It is perhaps the largest of the dendritic Alcyonarians. It is
dimorphic. Spongioderma, Kölliker; Cape of Good Hope. The surface
of this form is always covered by an encrusting sponge. Iciligorgia,
Ridley; Torres Straits. The stem and branches are compressed and
irregular in section.
Fam. 2. Sclerogorgiidae.—The medullary mass forms a distinct

axis consisting of closely packed elongate spicules with dense horny
sheaths.
Suberogorgia, Gray, has a wide distribution in the Pacific Ocean,

Indian Ocean, and the West Indies. Keroeides, W. and S., comes
from Japan.
Fam. 3. Melitodidae.—The axis in this family exhibits a series of

nodes and internodes (Fig. 155), the former consisting of pads
formed of a horny substance with embedded spicules, the latter of a
calcareous substance with only traces of a horny matrix. The
internodes are quite rigid, the nodes however give a certain degree
of flexibility to the colony as a whole. Neither the nodes nor the
internodes are penetrated by nutritive canals, but when dried the
nodes are porous.
Fig. 155.—Melitodes dichotoma, showing the swollen nodes and the internodes.
The principal genera are:—Melitodes, Verrill; widely distributed in the

Indian and Pacific Oceans, Cape of Good Hope, etc. This genus is in
some localities extremely abundant and exhibits great brilliancy and
variety of colour. The branching is usually dichotomous at the nodes.
Wrightella, Gray. This is a delicate dwarf form from Mauritius and the
coast of South Africa. Parisis, Verrill; Pacific Ocean from Formosa to
Australia but not very common. One species from Mauritius. The
branches arise from the internodes.
Fam. 4. Coralliidae.—The axis is formed by the fusion of spicules

into a dense, solid, inflexible, calcareous core.
Corallium, Lamarck. Corallium nobile, Pallas, the "precious coral,"

occurs in the Mediterranean, chiefly off the coast of North Africa, but
also on the coasts of Italy, Corsica, Sardinia, and it extends to the
Cape Verde Islands in the Atlantic Ocean. C. japonicum, Kishinouye,
called Akasango by the fishermen, occurs off the coast of Japan,
and C. reginae, Hickson, has recently been described from deep
water off the coast of Timor.[377] The genus Pleurocorallium, Gray, is
regarded by some authors as distinct, but the characters that are
supposed to distinguish it, namely, the presence of peculiar "opera-
glass-shaped spicules," and the occurrence of the verrucae on one
side of the branches only, are not very satisfactory. The following
species are therefore placed by Kishinouye[378] in the genus
Corallium:—C. elatius, Ridley (Momoirosango); C. konojoi,
Kishinouye (Shirosango); C. boshuensis, K.; C. sulcatum, K.; C.
inutile, K.; and C. pusillum, K.,—all from the coast of Japan. Of the
coral obtained from these species, the best kinds of Momoirosango
vary in price from £30 per pound downwards according to the quality.
The Shirosango is the least valuable of the kinds that are brought
into the market, and is rarely exported.[379] Three species of
Corallium (Pleurocorallium) have been described from Madeira,[380]
and one of these, C. johnsoni, has recently been found in 388
fathoms off the coast of Ireland.[381] Other species are C.
stylasteroides, from Mauritius; C. confusum, Moroff,[382] from
Sagami Bay in Japan; and an undescribed species obtained by the
"Siboga," off Djilolo. These corals range from shallow water to
depths of 300-500 fathoms. Pleurocoralloides, Moroff, differs from
the others in having very prominent verrucae and in the character of
the large spindle-shaped and scale-like spicules. It was found in
Sagami Bay, Japan. Specimens attributed to the genus
Pleurocorallium have been found fossil in the white chalk of France,
but Corallium has been found only in the tertiaries.[383]
Sub-Order 2. Axifera.
The axis in this sub-order may be horny, or horny with a core of
calcium carbonate, or composed of horn impregnated with calcium
carbonate, or of nodes of horn alternating with internodes of calcium
carbonate. It may be distinguished from the axis of the Pseudaxonia
by the fact that in no case have definite spicules been observed to
take part in its formation. It has been suggested that as the Axifera
represent a line of descent distinct from that of the Pseudaxonia they
should be placed in a separate order. Apart from the character of the
axis, however, the two sub-orders show so many affinities in their
general anatomy that it is better to regard the two lines of descent as
united within the Gorgonacean limit. It is very improbable that the
two groups sprang independently from a stoloniferous ancestor.
Fam. 1. Isidae.—This family includes all those Axifera in which the
axis is composed of alternate nodes of horn and internodes of
calcareous substance.
There can be little doubt of the close affinities of many of the genera
of this family with the Melitodidae among the Pseudaxonia. In both
the coenenchym is thin and the coelenteric cavities short. No
important differences have been observed between the structure of
the zooids of the two families, and now that we know that the
"nutritive canals" of Melitodes do not perforate the nodes there is no
important difference left between the coenosarcal canal systems.
The structure and method of calcification of the internodes of the two
families are very similar. The main difference between them is that
the nodes of the Isidae are purely horny, whereas in the Melitodidae
the horny substance of the nodes contains calcareous spicules.
The principal genera are:—Isis, Linnaeus; Pacific Ocean. This genus

forms substantial fan-shaped colonies with, relatively, a thick
coenenchym, short stout internodes and black horny nodes.
Mopsea, Lamouroux; Coast of Australia. The verrucae are club-
shaped and are arranged in spiral rows round the stem. Acanella,
Gray; principally found in deep water in the Atlantic Ocean but also
in the Pacific. The internodes are long and the branches arise from
the nodes. Most of the species occur in deep water, some in very
deep water (A. simplex, 1600 to 1700 fathoms). In this and the
following genera the coenenchym is thin and the zooids imperfectly
or not retractile. Ceratoisis, Wright; Atlantic Ocean, extending from
shallow to deep water. The branches arise from the nodes.
Chelidonisis, Studer; deep water off the Azores. Isidella, Gray;
Mediterranean Sea. Bathygorgia, Wright; off Yokohama, 2300
fathoms. This genus is unbranched, with very long internodes and
short nodes. The zooids are arranged on one side only of the stem.
Fam. 2. Primnoidae.—This is a well-marked family. The axis of the

colonies is horny and calcareous. The coenenchym and the non-
retractile zooids are protected by scale-like spicules, which usually
overlap and form a complete armour for the protection of the soft
parts. On the aboral side of the base of each tentacle there is a
specialised scale, and these fit together, when the tentacles are
folded over the peristome, to form an operculum.
The principal genera are:—Primnoa, Lamouroux; Atlantic Ocean,

occurring also in the Norwegian fjords. This genus is usually found in
moderately deep water, 100 to 500 fathoms. Primnoella, Gray. This
genus seems to be confined to the temperate seas of the southern
hemisphere. It is unbranched. The zooids are arranged in whorls
round the long whip-like stem. Plumarella, Gray; southern
hemisphere, in moderately deep water. This is branched pinnately in
one plane. The zooids are small and arise at considerable intervals
alternately on the sides of the branches. Stenella, Gray; widely
distributed in deep water. The zooids are large and are arranged in
whorls of three situated at considerable distances apart. Stachyodes,
W. and S.; Fiji, Kermadecs, Azores, in deep water. Colony feebly
branched. Zooids in regular whorls of five. Other genera belonging to
this group of Primnoidae are Thouarella, Gray, and Amphilaphis,
Antarctic seas.
The following genera are placed in separate sub-families:—

Callozostron, Wright; Antarctic Sea, 1670 fathoms. The axis is
procumbent and the zooids are thickly set in rows on its upper
surface. The zooids are protected by large imbricate scales, of which
those of the last row are continued into long spine-like processes.
Calyptrophora, Gray; Pacific Ocean, in deep water. The base of the
zooids is protected by two remarkably large scales. Primnoides, W.
and S.; Southern Ocean. The opercular scales are not distinctly
differentiated and the calyx is therefore imperfectly protected.
Fam. 3. Chrysogorgiidae.[384]—The axis in this family is composed

of a horny fibrous substance with interstratified calcareous particles,
and it springs from a calcareous plate, which sometimes gives off
root-like processes. It may be unbranched or branched in such a
way that the branches of the second, third, and subsequent orders
assume in turn the direction of the base of the main axis. The axis is
frequently of a metallic iridescent appearance. The zooids usually
arise in a single straight or spiral row on the branches, and are not
retractile. The coenenchym is thin. The spicules vary considerably,
but in a very large proportion of the species they are thin, oval, or
hour-glass plates (Fig. 149, 10, p. 336).
By some authors this family is considered to be the simplest and

most primitive of the Axifera; but the delicate character of the axis of
the main stem and branches, the thinness of the coenenchym, the
position of the zooids on one side of the branches only, and the
tenuity of the calcareous spicules may be all accounted not as
primitive characters, but as special adaptations to the life in the slow
uniform currents of deep water.
The principal genera are:—Lepidogorgia, Verrill; Atlantic and Pacific

Oceans, 300 to 1600 fathoms. Axis unbranched. Zooids large and
arranged in a single row. Trichogorgia, Hickson; Cape of Good Hope,
56 fathoms. Colony branching in one plane. Zooids numerous and
on all sides of the branches. Chrysogorgia, D. and M.; deep water.
Axis branched. Spicules on the zooids always large. Metallogorgia,
Versluys; Atlantic Ocean, 400 to 900 fathoms. Basal part of the stem
unbranched (monopodial). Iridogorgia, Verrill. Spiral stem and
branches. Pleurogorgia, Versluys. Axis branched in one plane.
Coenenchym thick. Riisea, D. and M. Monopodial stem and thick
coenenchym.
Fam. 4. Muriceidae.—This is a large family, exhibiting very great

variety of habit. The spicules are often very spiny, and project
beyond the surface of the ectoderm, giving the colony a rough
appearance. A great number of genera have been described, but
none of them are very well known. The family requires careful
revision.
The more important genera are:—Acanthogorgia, Gray; principally in

deep water in the Atlantic Ocean. The calices are large, cylindrical,
and spiny. Villogorgia, D. and M.; widely distributed. Delicate,
graceful forms, with thin coenenchym. Echinomuricea, Verrill;
Muricea, Lamouroux; Paramuricea, Köll; Acamptogorgia, W. and S.;
Bebryce, Philippi.
Fam. 5. Plexauridae.—In this family we find some of the largest and

most substantial Gorgonids. The axis is usually black, but its horny
substance may be impregnated with lime, particularly at the base.
The coenenchym is thick, and the zooids are usually completely
retractile, and the surface smooth. The species of the family are
principally found in shallow water in warm or tropical regions.
The principal genera are:—Eunicea, Lamouroux. The calices are

prominent, and not retractile. Plexaura, Lamouroux; Euplexaura,
Verrill. Eunicella, Verrill. With an outer layer of peculiar torch-shaped
spicules. The only British species of this order is Eunicella cavolini
(formerly called Gorgonia verrucosa). It is found in depths of 10 to 20
fathoms off the coast of the English Channel and west of Scotland.
Occasionally specimens are found in which a gall-like malformation
with a circular aperture is seen, containing a Barnacle. Such gall
formations, common enough in some species of Madreporaria, are
rarely found in Alcyonaria.
Fig. 156.—Eunicella cavolini. Some branches of a large dried specimen, showing

a gall formed by a Cirripede.
Fam. 6. Gorgoniidae.—This family contains some of the

commonest and best-known genera of the order. They usually form
large flexible branched colonies with delicate horny axes and thin
coenenchym. The zooids are usually completely retractile.
The principal genera are:—Gorgonia, Linn. This genus includes

Gorgonia (Rhipidogorgia) flabellum, the well-known fan Gorgonia
with intimately anastomosing branches, from the warm waters of the
Atlantic Ocean. The genera Eugorgia, Verrill, and Leptogorgia, Milne
Edwards, differ from Gorgonia in the character of the spicules. In
Xiphigorgia, Milne Edwards, from the West Indies, the branches are
much compressed, forming at the edges wing-like ridges, which bear
the zoopores in rows. Malacogorgia, Hickson, has no spicules. Cape
of Good Hope.
Fam. 7. Gorgonellidae.—In this family the horny axis is

impregnated with lime. The surface of the coenenchym is usually
smooth, and the spicules small. The colonies are sometimes
unbranched (Juncella). In the branching forms the axis of the
terminal branches is often very fine and thread-like in dimensions.
Fig. 157.—Verrucella guadaloupensis, with an epizoic Brittle star (Oph.) of similar

colour.
The principal genera are:—Gorgonella, with a ramified flabelliform

axis; Ctenocella, with a peculiar double-comb manner of branching;
and Juncella, which forms very long unbranched or slightly branched
colonies, with club-shaped spicules. All these genera are found in
shallow water in the tropical or semi-tropical regions of the world.
Verrucella is a genus with delicate anastomosing branches found
principally in the shallow tropical waters of the Atlantic shores. Like
many of the Gorgonacea, with branches disposed in one plane
(flabelliform) Verrucella frequently carries a considerable number of
epizoic Brittle stars, which wind their flexible arms round the
branches, and thus obtain a firm attachment to their host. There is
no reason to suppose that these Brittle stars are in any sense
parasitic, as a specimen that bears many such forms shows no sign
of injury or degeneration, and it is possible they may even be of
service to the Verrucella by preying upon other organisms that might
be injurious. An interesting feature of the association is that the
Brittle stars are of the same colour as the host, and the knob-like
plates on their aboral surface have a close resemblance to the
verrucae (Fig. 157).
Order V. Pennatulacea.
The Sea-pens form a very distinct order of the Alcyonaria. They are
the only Alcyonarians that are not strictly sedentary in habit, that are
capable of independent movement as a whole, and exhibit a bilateral
symmetry of the colony. No genera have yet been discovered that
can be regarded as connecting links between the Pennatulacea and
the other orders of the Alcyonaria. Their position, therefore, is an
isolated one, and their relationships obscure.
The peculiarities of the order are due to the great growth and
modification in structure of the first formed zooid of the colony. This
zooid (Oozooid, Hauptpolyp, or Axial zooid) increases greatly in
length, develops very thick fleshy walls, usually loses its tentacles,
digestive organs, and frequently its mouth, exhibits profound
modification of its system of mesenteries, and in other ways
becomes adapted to its function of supporting the whole colony.
Fig. 158.—Diagram of a Sea-pen. L, leaves composed of a row of autozooids; R,
rachis; St, stalk; T, anthocodia of the axial zooid, usually suppressed. (After
Jungersen.)
The axial zooid shows from an early stage of development a division

into two regions: a distal region which produces by gemmation on
the body-wall numerous secondary zooids, and becomes the rachis
of the colony; and a proximal region which becomes the stalk or
peduncle, and does not produce buds (Fig. 158). The secondary
zooids are of two kinds: the autozooids and the siphonozooids. The
former have the ordinary characters of an Alcyonarian zooid, and
produce sexual cells; the latter have no tentacles, a reduced
mesenteric system, and a stomodaeum provided with a very wide
siphonoglyph.
The arrangement of the autozooids and siphonozooids upon the

axial zooid is subject to great modifications, and affords the principal
character for the classification of the order. In the Pennatuleae the
autozooids are arranged in two bilaterally disposed rows on the
rachis, forming the leaves or pinnae of the colony (Fig. 158). The
number in each leaf increases during the growth of the colony by the
addition of new zooids in regular succession from the dorsal to the
ventral side of the rachis[385] (Fig. 159). In other Pennatulacea the
autozooids are arranged in rows which do not unite to form leaves
(Funiculina), in a tuft at the extremity of a long peduncle (Umbellula),
scattered on the dorsal side of the rachis (Renilla, Fig. 160), or
scattered on all sides of the rachis (Cavernularia, Fig. 161). In those
forms in which the autozooids are scattered the bilateral symmetry of
the colony as a whole becomes obscured. The siphonozooids may
be found on the leaves (Pteroeides), but more frequently between
the leaves or rows of autozooids, or scattered irregularly among the
autozooids. Usually the siphonozooids are of one kind only, but in
Pennatula murrayi there is one specially modified siphonozooid at
the base of each leaf,[386] which appears to have some special but
unknown function.
Fig. 159.—Diagram of a portion of a rachis of a Sea-pen, aut, The rows of

autozooids; 1-6, the order of age of the autozooids composing a leaf; D, the
dorsal side of the rachis; Si, the siphonozooids; V, the ventral side of the
rachis. (After Jungersen.)
In Umbellula gracilis each siphonozooid bears a single pinnate

tentacle, and in some other species of the same genus there is a
tentacle which is not pinnate.[387]
The zooids and coenenchym are usually protected by a crust of

coloured or colourless, long, smooth, needle-like, calcareous
spicules, situated principally in the superficial layer, so as to leave
the subjacent tissues soft and spongy in texture. In some cases the
spicules are smooth double clubs, rods, discs, or irregular granules,
and in Sarcophyllum, Chunella, some species of Umbellula and
others, there is no calcareous skeleton. The tuberculated spindles,
so common in other Alcyonaria, are not found in any species. In
most genera a horny, or calcified horny rod is embedded in the
central part of the axial polyp, serving as a backbone or support for
its muscles. It is absent, however, in Renilla, and reduced or absent
in Cavernularia.
The sexual organs are borne by the mesenteries of the autozooids
only, and each colony is either male or female. There is no record of
hermaphroditism in the order. The eggs contain a considerable
amount of yolk, and fertilisation is effected in the sea-water after their
discharge. The segmentation is irregular, and the free-swimming
ciliated larva (of Renilla) shows the rudiments of the first buds from
the axial polyp before it settles down in the mud.
The Sea-pens are usually found on muddy or sandy sea-bottoms,

from a depth of a few fathoms to the greatest depths of the ocean. It
is generally assumed that their normal position is one with the
peduncle embedded in the mud and the rachis erect. Positive
evidence of this was given by Rumphius, writing in 1741, in the case
of Virgularia rumphii and V. juncea at Amboina,[388] and by Darwin in
the case of Stylatula darwinii at Bahia Blanca.[389]
"At low water," writes Darwin, "hundreds of these zoophytes might be

seen projecting like stubble, with the truncate end upwards, a few
inches above the surface of the muddy sand. When touched or
pulled they suddenly drew themselves in with force so as nearly or
quite to disappear."
It is not known whether the Pennatulids have the power of moving

from place to place when the local conditions become unfavourable.
It is quite probable that they have this power, but the accounts given
of the Sea-pens lying flat on the sand do not appear to be founded
on direct observation. The fable of Pennatula swimming freely "with
all its delicate transparent polypi expanded, and emitting their usual
brilliant phosphorescent light, sailing through the still and dark abyss
by the regular and synchronous pulsations of the minute fringed
arms of the whole polypi," appears to be based on a statement made
by Bohadsch in 1761, and picturesque though it be, is undoubtedly
erroneous.
The brilliant phosphorescence of many species of Pennatulacea has
been observed by many naturalists, and it is very probable that they
all exhibit this property to some degree. The phosphorescence
appears to be emitted by the mesenteric filaments of the autozooids,
but it is not yet determined whether the phenomenon is confined to
these organs or is more generally distributed.
The Pennatulacea are usually devoid of epizoites, but occasionally

the parasitic or semi-parasitic Entomostracan Lamippe is found in
the zooids. A small crab is also frequently found between the large
leaves of species of Pteroeides. The most remarkable case of
symbiosis, however, has recently been observed in the form of an
encrusting Gymnoblastic Hydroid[390] living on the free edge of the
leaves of a species of Ptilosarcus.
The order Pennatulacea is divided into four sections.
Sect. 1. Pennatuleae.—In this section the colony is distinctly

bilaterally symmetrical, and the autozooids are arranged in rows with
their body-walls fused to form leaves.
The genus Pteroeides, the representative genus of the family

Pteroeididae, is a fleshy Sea-pen found in shallow sea water in the
warm waters of the Pacific Ocean and in the Mediterranean. It has
large leaves with long spiny, projecting spicules, and the
siphonozooids are borne by the leaves. Pennatula, the
representative genus of the family Pennatulidae, has a wider
distribution in area and in depth. Pennatula phosphorea is a common
British species, found in depths of 10 to 20 fathoms in many
localities off our coasts. It is about 5 inches in length. There are
several varieties of this species distributed in Atlantic waters.
Pennatula grandis is a magnificent species found in Norwegian
fjords, in the Faeroe Channel, and off the northern coasts of N.
America, in depths of from 50 to 1255 fathoms. Specimens have
been obtained no less than 2½ feet in length. P. murrayi and P.
naresi are species of the genus found at depths of a few hundred
fathoms in tropical seas.
The genus Virgularia, belonging to the family Virgulariidae, is

represented in the British seas by V. mirabilis, a long slender Sea-
pen found in many localities off the Scottish coasts.
Sect. 2. Spicatae.—This section includes those Sea-pens in which

the autozooids are arranged bilaterally on the axial zooid in rows or
more irregularly, but do not unite to form leaves. It is a large section
and contains many widely divergent genera.
The family Funiculinidae is represented on our coasts by Funiculina

quadrangularis, a long and slender Sea-pen 2 to 3 feet in length. The
autozooids are arranged in oblique rows, and the siphonozooids are
on the ventral side of the rachis. There is one point of special interest
in this genus. The siphonozooids appear to change as the colony
grows and to become autozooids. If this is the case it may be more
correct to describe the genus as devoid of true siphonozooids.
The family Anthoptilidae contains the species Anthoptilum

grandiflorum, which has a wide distribution in depths of 130 to 500
fathoms in the N. and S. Atlantic Ocean. It is perhaps the largest of
all the Pennatulacea, specimens having been obtained from the
Cape of Good Hope over 4 feet long with expanded autozooids,
each more than half an inch in length.
The family Kophobelemnonidae contains a number of forms with

remarkably large autozooids arranged in irregular rows on the two
sides of the rachis. The siphonozooids are numerous and scattered,
and their position is indicated by small papilliform calices on the
coenenchym. The surface of these pens is usually rough, owing to
the presence of numerous coarse projecting spicules.
Kophobelemnon occurs in the Mediterranean in deep water, off the
coasts of Ireland and Scotland, and in other regions.
The family Umbellulidae contains some of the most remarkable and

interesting examples of the deep-sea fauna. The peduncle is very
long and the rachis stunted and expanded. The autozooids are of
great size, non-retractile, and arranged in a cluster or rosette on the
terminal rachis. There is a wide structural range between the
species. Some species have numerous large spicules, others have
none. In some species the siphonozooids have a single pinnate or
digitate tentacle, in others the siphonozooids are of the usual type.
Umbellula appears to be a somewhat rare but cosmopolitan genus in
deep water, extending from the Arctic to the Antarctic region in water
ranging from 200 to 2500 fathoms.
The interesting genus Chunella was discovered by the German

"Valdivia" Expedition at a depth of about 420 fathoms off the coast of
E. Africa, and subsequently by the Dutch "Siboga" Expedition at a
depth of about 500 fathoms in the Malay Archipelago. According to
Kükenthal,[391] this genus with another closely allied genus
Amphianthus should form a new section of Pennatulacea, the
Verticilladeae. Chunella has a long and very delicate rachis and
peduncle, and the former terminates in a single autozooid and has
five or six whorls of three autozooids, situated at considerable
distances from one another. Spicules are absent. The full description
of this genus has not yet been published, but it is clear that it
occupies a very isolated position in the order.
Fig. 160.—Renilla reniformis, a small specimen (34 mm.), showing the dorsal
side of the expanded rachis. A, autozooid; H, the mouth of the axial zooid;

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10. Money orders are considered cash.

11. A customer's check received in settlement of an account receivable is considered cash.

20. A voucher is a written authorization to make a cash payment.

35. The bank reconciles its statement to the company's records.

46. A petty cash fund is used to pay relatively large amounts.

52. Sarbanes­Oxley applies to

57. The objectives of internal control are to

60. A firm's internal control environment is not influenced by

61. An element of internal control is

62. A necessary element of internal control is

63. Which of the following should not be considered cash by an accountant?

64. The cash account in the company's ledger is a(n)

65. The portion of an invoice that is returned with payment is a

70. A voucher is usually supported by

71. Credit memos from the bank

73. A bank statement

77. A bank reconciliation should be prepared periodically because

78. The bank reconciliation

98. A bank reconciliation should be prepared

Cash balance per books, 5/31 $5,400

Cash balance per books, 9/30 $2,750

Cash balance per bank, 6/30 $13,000

Cash balance per bank, 10/31 $17,000

104. During a bank reconciliation process,

Balance per bank $16,750

What is the adjusted balance on the bank reconciliation?

109. Entries are made to the petty cash account when

113. Cash equivalents include

114. Cash equivalents

115. A minimum cash balance required by a bank is called

ANSWER: 1. (c) control procedures

ANSWER: Internal control provides reasonable assurance that

There are many other examples that would be correct.

2) An unusually high number of refunds for Clerk #3 could mean that

4) A sudden increase in slow payments could mean that an employee

(b) This is a strength.

(c) This is a strength.

(d) This is a weakness. The bank reconciliation should be prepared by

(b) This is a strength.

(c) This is a strength.

How much was the beginning balance of the cash account?

ANSWER: $245,000 × 84% = $205,800

Beg. Cash = $41,075 ($80,275 + $205,800 – $245,000)

Specifically, a voucher system is a set of procedures for authorizing and

After a voucher is prepared, it is submitted for approval. Once approved, the

1. The beginning change fund in the drawer was not considered.

133. List the principal advantages of electronic funds transfers.

135. The following items may appear on a bank statement:

52. SarbanesOxley applies to