Using Financial Accounting Information The Alternative To Debits and Credits 10Th Edition Porter Test Bank Full Chapter PDF

Using Financial Accounting Information
The Alternative to Debits and Credits

10th Edition Porter Test Bank
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Chapter 6
True / False
1. A six-month bank certificate of deposit would be classified as a cash equivalent.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
REFERENCES: pp. 278, 279
LEARNING OBJECTIVES: FACC.PONO.18.06-01 - LO: 06-01
NATIONAL STANDARDS: United States - BUSPROG: Communications
ACCREDITING STANDARDS: ACBSP: APC-10-Internal Control
AICPA: FN-Reporting
KEYWORDS: Bloom's: Remembering
2. Petty cash typically is composed of coins and currency kept on hand in a business to make minor disbursements.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 278-283
AICPA: FN-Reporting
3. The key to the classification of an amount as cash is that it be available to pay debts within a three-month period of
time.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
© 2018 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Page 1
Chapter 6
4. For a buyer, a purchase order is not the basis for recording a purchase and an account payable.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
5. Coin and currency on hand and cash on deposit in the form of checking and savings accounts are the most obvious
forms of cash.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
6. A bank does not have the legal right to demand that a customer notify it before making a withdrawal from a savings
account.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
AICPA: FN-Reporting
Chapter 6
7. The key to the classification of an amount as cash is that it be readily available to pay debts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
8. Cash equivalents are investments that are readily convertible to a known amount of cash, where readily means six
months or less.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
9. Treasury notes with a maturity of six months or less that are issued by the federal government are cash equivalents.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
10. A check written by a company but not yet presented to the bank for payment is called a check in transit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
11. When reconciling a bank account, the company does not have to prepare an adjusting entry for outstanding checks.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG: Analytic
AICPA: FN-Measurement
12. When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Chapter 6
13. In a sound internal control system, all cash receipts should be deposited intact in the bank on a daily basis.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
14. Checks received from customers are considered to be cash in the company’s books.
a. True
b. False
ANSWER: True
AICPA: FN-Reporting
15. A bank informs a customer that a service charge has been assessed on its account by including a credit memorandum
on the monthly bank statement.
a. True
b. False
ANSWER: False
AICPA: FN-Reporting
Chapter 6
16. On a bank reconciliation, outstanding checks are added to the cash balance per the bank statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
17. When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a
debit memorandum.
a. True
b. False
ANSWER: False
AICPA: FN-Reporting
18. When a bank pays interest or collects an amount owed to a company by one of the bank's customers, the bank issues a
credit memorandum.
a. True
b. False
ANSWER: True
AICPA: FN-Reporting
Chapter 6
19. On a bank reconciliation, bank charges for the month are added to the cash balance per the books.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
20. On a bank reconciliation, interest earned for the month is added to the cash balance per the books.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
21. A company prepares adjusting entries for debit memorandums but not for credit memorandums.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
22. At the time a petty cash fund is replenished, an adjustment must be made to record its replenishment and to recognize
the various expenses incurred.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
23. The Sarbanes-Oxley Act requires that a company’s internal audit staff issue a report on their assessment of the
company’s internal control.
a. True
b. False
ANSWER: False
AICPA: FN-Reporting
24. After it completes a bank reconciliation, a business must prepare a number of adjustments to its records. The additions
and deductions from the Cash account on the books should be the basis for the adjustments.
a. True
b. False
ANSWER: True
AICPA: FN-Reporting
Chapter 6
25. A good system of internal control is important to make a company's accounting records completely foolproof.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
26. An accounting system must be fully computerized in order to ensure the company has proper internal control.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
27. Audit committees are required to consist of only directors who are key officers of the company.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
28. A company policy that requires all prospective employees to be interviewed by the personnel department is an
example of an accounting control.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
29. One concern of the internal auditor is the efficiency with which the organization is run.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
30. If a company has internal auditors, it does not need to have external auditors.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
31. Accounting controls primarily concern safeguarding assets and ensuring the reliability of the financial statements.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
32. A company’s internal control system is designed by its external auditors.

a. True
b. False
ANSWER: False
AICPA: FN-Reporting
33. The only reason a company needs to create an internal control system is to deter intentional fraudulent acts.
a. True
b. False
ANSWER: False
AICPA: FN-Reporting
Chapter 6
34. A good system of internal control requires that the physical custody of assets be separated from the accounting for
those assets. This concept is known as safeguarding assets and records.
a. True
b. False
ANSWER: False
AICPA: FN-Reporting
35. Independent verification can be effective in preventing collusion.

a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
36. As part of good internal control, disbursements can be made either by check or cash.
a. True
b. False
ANSWER: False
AICPA: FN-Reporting
Chapter 6
37. Most merchandisers receive checks and currency from customers in two ways: (1) cash received over the counter from
cash sales and (2) cash received in the mail from credit sales.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
38. Only one copy of the list of cash received should be prepared when an employee opens mail with customer payments
to avoid complexity in the accounting system and maintain control.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
AICPA: FN-Reporting
39. The use of customer statements as a control device will be effective only if the employees responsible for the custody
of cash received through the mail, for record keeping, and for authorization of adjustments to customers’ accounts are not
allowed to prepare and mail statements to customers.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
Multiple Choice
40. Which of the following assets is considered the most liquid?

a. Cash
b. Accounts receivable
c. Merchandise inventory
d. Prepaid expenses
ANSWER: a
DIFFICULTY: Easy
AICPA: FN-Reporting
KEYWORDS: Bloom's: Applying
41. Which of the following items is not included in cash?

a. A bank certificate of deposit for one year
b. A savings account at the bank
c. A checking account at the bank
d. All of these are included in cash.
ANSWER: a
AICPA: FN-Reporting
KEYWORDS: Bloom's: Understanding
42. Which of the following is not considered to be a cash equivalent?

a. Corporate commercial paper due in 90 days after purchase
b. U.S. Treasury bills with an original maturity of six months
c. A money market account with a stock brokerage firm
d. A certificate of deposit with a term of 75 days when acquired
ANSWER: b
AICPA: FN-Reporting
Chapter 6
43. How are cash equivalents reported or disclosed in the financial statements?
a. They appear only on the statement of cash flows.
b. They are included with short-term investments under current assets on the balance sheet.
c. They are included with cash under current assets on the balance sheet.
d. They are disclosed only in a footnote to the balance sheet.
ANSWER: c
AICPA: FN-Reporting
44. Which of the following could never be considered to be cash equivalents?

a. Common stock issued by a corporation
b. Money market funds
c. Corporate commercial paper
d. U.S. Treasury bills
ANSWER: a
AICPA: FN-Reporting
45. Which of the following is not a cash equivalent?

a. 30-day certificate of deposit
b. 60-day commercial paper
c. 90-day U.S. Treasury bill
d. 180-day note issued by a local or state government
ANSWER: d
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
46. Effective cash management and control includes all of the following except
a. the use of a petty cash fund.
b. bank reconciliations.
c. short-term investments of excess cash.
d. purchase of stocks and bonds.
ANSWER: d
DIFFICULTY: Easy
AICPA: FN-Reporting
47. Checks presented for payment and paid by the bank are known as
a. canceled checks.
b. certified checks.
c. NSF checks.
d. outstanding checks.
ANSWER: a
AICPA: FN-Reporting
48. Deposits made by a company but not yet reflected on a bank statement are called
a. debit memoranda.
b. deposits in transit.
c. credit memoranda.
d. none of these are correct.
ANSWER: b
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
49. Which of the following statements is true?
a. Good cash management practices dictate that a company should maintain as large a balance as possible in its
Cash account.
b. Sound internal control practice dictates that all cash payments should be made by check.
c. The person handling the cash should also prepare the bank reconciliation.
d. Petty cash can be substituted for a checking account to expedite the payment of all disbursements.
ANSWER: b
AICPA: FN-Reporting
50. Checks returned by a bank because customers did not have sufficient funds in their account are called
a. canceled checks.
b. certified checks.
c. NSF checks.
d. outstanding checks.
ANSWER: c
DIFFICULTY: Easy
AICPA: FN-Reporting
51. Which of the following would not appear on a bank statement for a checking account?
a. Service charges
b. Interest earned
c. Outstanding checks
d. Deposits
ANSWER: c
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
52. Which of the following procedures is not part of preparing a bank reconciliation of a checking account?
a. Tracing deposits listed on the bank statement to the books to identify deposits in transit
b. Arranging canceled checks in numerical order and tracing them to the books to identify outstanding checks
c. Identifying items added on the bank statement which have not been recorded as cash receipts by the company
d. Preparing adjustments to reverse the transactions recorded for checks that are still outstanding
ANSWER: d
53. Which of the following items would not be a reconciling item?

a. Canceled checks
b. NSF checks
c. Outstanding checks
d. Deposits in transit
ANSWER: a
54. Which of the following items would be added to the balance per books on a bank reconciliation?
a. Outstanding checks
b. Deposit in transit
c. Service charge assessed by the bank
d. Interest collected by the bank on a customer note
ANSWER: d
Chapter 6
55. Which of the following items would be added to the balance per bank statement on a bank reconciliation?
ANSWER: b
56. Which of the following items would be subtracted from the balance per books on a bank reconciliation?
ANSWER: c
57. Which of the following items would be subtracted from the balance per bank statement on a bank reconciliation?
ANSWER: a
Chapter 6
58. Which of the following statements best describes the term “outstanding check?”
a. A check written by a company and presented to the bank for payment.
b. A check written by a company but not yet presented to the bank for payment.
c. A check written by a customer that has been presented to the bank for payment.
d. A check written by a customer that has not yet been presented to the bank for payment.
ANSWER: b
AICPA: FN-Reporting
59. The accountant for Fazzi Corp. was preparing a bank reconciliation as of April 30, 2017. The following items were
identified:
Fazzi’s book balance $46,200

Outstanding checks 1,100
Interest earned on checking account 50
Customer's NSF check returned by the bank 500
In addition, Fazzi incorrectly recorded a customer's check in cash receipts as $150; the bank recorded the amount correctly
as $510. What amount will Fazzi report as its adjusted cash balance at April 30, 2017?
a. $44,650
b. $45,890
c. $46,110
d. $46,250
ANSWER: c
RATIONALE: $46,200 (Book balance) + $50 (Interest earned) – $500 (NSF check) + $360
(Transposition error) = $46,110
KEYWORDS: Bloom's: Analyzing
Chapter 6
60. The accountant for Busch Corp. was preparing a bank reconciliation as of February 28, 2017. The following items
were identified:
Busch’s book balance $15,000

Service charge 15
What amount will Busch report as its adjusted cash balance at February 28, 2017?
a. $12,385
b. $12,500
c. $14,885
d. $17,385
ANSWER: c
RATIONALE: $15,000 (Book balance) – $100 (NSF check) – $15 (Service charge) = $14,885
61. When preparing a bank reconciliation, deposits in transit are

a. added to the bank statement balance.
b. deducted from the company’s book balance.
c. added to the company's bank balance.
d. deducted from the bank statement balance.
ANSWER: a
DIFFICULTY: Easy
Chapter 6
62. When preparing a bank reconciliation, NSF checks are
a. added to the company’s book balance.
c. added to the bank statement balance.
ANSWER: b
DIFFICULTY: Easy
63. When preparing a bank reconciliation interest earned on a checking account is

ANSWER: a
DIFFICULTY: Easy
64. When preparing a bank reconciliation, outstanding checks are

a. deducted from the bank statement balance.
d. added to the company’s book balance.
ANSWER: a
DIFFICULTY: Easy
Chapter 6
65. When preparing a bank reconciliation, bank service charges are
ANSWER: b
DIFFICULTY: Easy
66. The set of items below was identified in preparing a bank reconciliation for Mars Corp. as of August 31, 2017.
Bank statement balance $19,500

Mars’s book balance (before adjustments) ?
Customer's NSF check 350
Service charges 100
Deposit in transit 1,000
Mars Corp.’s balance per books before the reconciliation is
a. $17,410.
b. $17,900.
c. $18,190.
d. $18,310.
ANSWER: c
RATIONALE: $19,500 (Bank statement balance) + $1,000 (Deposit in transit) – $2,700 (Outstanding
checks) = $17,800 (Adjusted bank balance)
Assuming that the adjusted book balance is equal to the adjusted bank balance, there is a
need to reverse the adjustments. Therefore $17,800 (Adjusted book balance) + $350
(NSF check) + $100 (Service charge) – $60 (Interest earned) = $18,190
DIFFICULTY: Challenging
Chapter 6
67. While reconciling the checking account, an accountant with Sonic Corporation noticed that an error had been made in
recording a check received by the company. Sonic recorded the receipt as $729, and the correct amount of the check was
$279. Which of the following reconciling adjustments is required?
a. Add $450 to the company’s book balance
b. Deduct $450 from the company’s book balance
c. Add $450 to the bank statement balance
d. Deduct $450 from the bank statement balance
ANSWER: b
68. A debit memorandum appeared on Cinco Inc.’s May bank statement. How will Cinco treat this amount on its May
bank reconciliation?
a. Add it to the bank balance
b. Add it the book balance
c. Deduct it from the bank balance
d. Deduct it from the book balance
ANSWER: d
69. A credit memorandum appeared on Central Company’s bank statement. How will Central treat this amount on its bank
reconciliation?
a. Add it to the bank balance
b. Add it to the book balance
c. Deduct it from the bank balance
d. Deduct it from the book balance
ANSWER: b
Chapter 6
70. Which of the following is an example of a debit memorandum?
a. Service charge
b. Interest earned on the account balance
c. Outstanding check
d. Company error in recording a $500 deposit as $600
ANSWER: a
71. Which of the following is an example of a credit memorandum?

a. Service charge
b. Collection of a note receivable by the bank
c. Outstanding check
d. Company error in recording a $600 deposit as $500
ANSWER: b
72. Which of the following procedures is incorrect for setting up and maintaining a petty cash fund?
a. A check is prepared for a fixed amount; when the check is cashed, the money is entrusted to a petty cash
custodian.
b. A journal entry is recorded to establish the fund and obtain the cash.
c. When appropriate documentation is presented, cash payments are made from the fund; the petty cash
custodian retains the documentation.
d. When the petty cash fund is replenished, a journal entry is recorded to recognize an increase in the petty cash
account.
ANSWER: d
Chapter 6
73. Which of the following statements regarding a credit memorandum is true?
a. A credit memorandum is subtracted from the balance per the company’s books.
b. A credit memorandum could be issued for bank service charges.
c. A credit memorandum is issued when a customer gives the company an NSF check.
d. A credit memorandum is added to the balance per the company’s books.
ANSWER: d
74. Which of the following statements regarding a credit memorandum is not true?
a. A credit memorandum is added to the balance per the company’s books.
b. A credit memorandum could be issued for interest earned on checking account balances.
c. A credit memorandum is issued when the bank collects a note for the customer.
d. A credit memorandum is subtracted from the balance per the company’s books.
ANSWER: d
75. If a company erroneously records a $500 deposit as $400 in its books, which of the following must occur when
reconciling the bank statement?
a. The company will have to increase the balance per the bank statement by $100.
b. The company will have to increase the balance per the books by $100.
c. The company will have to decrease the balance per bank statement by $100.
d. The company will have to decrease the balance per the books by $100.
ANSWER: b
DIFFICULTY: Easy
Chapter 6
76. Realistic Sound’s unadjusted bank balance amounted to $3,000. Outstanding checks amounted to $500 and deposits in
transit totaled $300. Based on this information alone, Realistic’s adjusted cash balance is
a. $3,200.
b. $3,300.
c. $2,800.
d. $2,700.
ANSWER: c
RATIONALE: $3,000 (Unadjusted bank balance) – $500 (Outstanding checks) + $300 (Deposits in
transit) = $2,800
77. If the balance on the bank statement does not equal the balance in the Cash account, then it can be assumed that
a. the company has no errors in its records concerning the Cash account.
b. the bank has made errors in preparing the statement.
c. the company has made errors in is records concerning the Cash account.
d. there will be items reconciling the difference.
ANSWER: d
DIFFICULTY: Easy
78. Which of the following items is a reconciling item on the bank side of a bank reconciliation?
a. Canceled checks
b. Outstanding checks
c. NSF checks
d. Service charge
ANSWER: b
DIFFICULTY: Easy
Chapter 6
79. When preparing a bank reconciliation, deposits in transit should be
a. added to the unadjusted book balance.
b. subtracted from the unadjusted book balance.
c. added to the unadjusted bank balance.
d. subtracted from the unadjusted bank balance.
ANSWER: c
DIFFICULTY: Easy
80. An outstanding check is a check that

a. has been presented to the bank for payment but has not been reported on the bank statement.
b. has been written by the account holder but has not been presented to the bank for payment.
c. is guaranteed for payment by the bank.
d. has been written for an amount that is greater than the balance in the account holder's bank account.
ANSWER: b
DIFFICULTY: Easy
Chapter 6
81. The treasurer for Rahm Corp. was preparing a bank reconciliation as of September 30, 2017. The following items
were identified:
Rahm’s book balance $32,800

Deposits in transit 4,300
Rahm Corp.'s adjusted cash balance at September 30, 2017 is
a. $34,600.
b. $34,900.
c. $32,500.
d. $32,800.
ANSWER: c
RATIONALE: $32,800 (Book balance) + $100 (Interest earned) – $400 (NSF check) = $32,500
82. Border Company’s Cash account had a balance of $962 on August 31. This included a bank deposit of $87 that was in
transit. The August 31 bank statement contained the following information:

NSF check 16
Bank service charge 7
Collection of notes receivable 68
Border also had checks outstanding of $169. What is Border’s adjusted cash balance at August 31?
a. $920
b. $940
c. $1,007
d. $1,089
ANSWER: c
RATIONALE: $1,089 (Bank balance) + $87 (Deposit in transit) – $169 (Outstanding checks) = $1,007,
or $962 (Book balance) + $68 (Note receivable) – $16 (NSF check) – $7 (Service charge)
= $1,007
Chapter 6
83. The accountant for Lola Corp. was preparing a bank reconciliation as of February 28, 2017. The following items were
identified:
Lola’s book balance $35,900

Interest earned on checking accounts 75
Customer’s NSF check returned by the bank 325
There was an error in recording a customer’s check as the check was recorded by Lola as $110, but the correct amount of
$101 was recorded by the bank.
Lola’s adjusted cash balance at February 28, 2017 is

a. $23,591.
b. $35,641.
c. $35,659.
d. $47,691.
ANSWER: b
RATIONALE: $35,900 (Book balance) – $9 (Transposition error) + $75 (Interest earned) – $325 (NSF
check) = $35,641
Chapter 6
84. Gentech Corp. prepared a bank reconciliation as of June 30, 2017. The following items were identified:
Gentech’s bank balance $14,300

Bank service charge 50
Gentech’s adjusted cash balance at June 30, 2017 is
a. $13,800.
b. $14,100.
c. $14,000.
d. $14,300.
ANSWER: c
RATIONALE: $14,300 (Bank balance) + $1,000 (Deposit in transit) – $1,300 (Outstanding checks) =
$14,000
Chapter 6
85. Taylor Corp. identified the following data in preparing a bank reconciliation on October 31, 2017.

Taylor’s book balance (before adjustments) ?
NSF check 300
Service charge 200
How much is Taylor’s adjusted cash balance on October 31, 2017?
a. $28,700
b. $29,100
c. $28,300
d. $29,600
ANSWER: a
RATIONALE: $29,600 (Bank statement balance) + $2,200 (Deposits in transit) – $3,100 (Outstanding
checks) = $28,700
Chapter 6
86. Taylor Corp. identified the following data in preparing a bank reconciliation on October 31, 2017.

Taylor’s book balance (before adjustments) ?
NSF check 300
Service charge 200
What is the net amount of the adjustments to Taylor’s cash balance as a result of the bank reconciliation?
a. No amounts need to be recorded.
b. $400 increase
c. $400 decrease
d. $900 decrease
ANSWER: c
RATIONALE: $100 (Interest earned) – $300 (NSF check) – $200 (Service charge) = ($400)
Chapter 6
87. Dinho Corporation identified the following data when preparing its April bank reconciliation:

Dinho’s book balance (before adjustments) ?
NSF checks 1,400
Service charge 300
In addition, Dinho incorrectly recorded a deposit in its books in the amount of $1,000. The correct amount was recorded
by the bank as $1,200.
What is the adjusted cash balance at the end of April?

a. $44,300
b. $45,500
c. $45,000
d. $45,700
ANSWER: b
RATIONALE: $45,000 (Bank statement balance) + $5,000 (Deposits in transit) – $4,500 (Outstanding
checks) = $45,500
Chapter 6
88. Dinho Corporation identified the following data when preparing its April bank reconciliation:

Dinho’s book balance (before adjustments) ?
NSF checks 1,400
Service charge 300
In addition, Dinho incorrectly recorded a deposit in its books in the amount of $1,000. The correct amount was recorded
by the bank as $1,200.
What is the net amount of the adjustments to Dinho’s book balance as a result of the bank reconciliation?
a. $1,675 increase
b. $1,700 increase
c. $1,675 decrease
d. $1,475 decrease
ANSWER: d
RATIONALE: $200 (Error correction) + $25 (Interest earned) – $300 (Service charge) – $1,400 (NSF
checks) = $(1,475)
Chapter 6
89. The following data was identified by Raines Corp. in preparation of its bank reconciliation on October 31, 2017:

Raines’ book balance (before adjustments) ?
NSF checks 400
Service charge 300
What is the adjusted cash balance on October 31, 2017?
a. $29,600
b. $30,100
c. $30,200
d. $30,700
ANSWER: a
RATIONALE: $30,700 (Bank statement balance) – $4,200 (Outstanding checks) + $3,100 (Deposits in
transit) = $29,600
Chapter 6
90. The following data was identified by Raines Corp. in preparation of a bank reconciliation on October 31, 2017:
Raines’ book balance (before adjustments) ?
NSF checks 400
Service charge 300
What is the net amount of the increase or decrease in Raines’ cash balance which must be recorded as a result of the
adjustments identified by the bank reconciliation?
a. $100 decrease
b. $300 decrease
c. $400 decrease
d. $600 decrease
ANSWER: d
RATIONALE: $100 (Interest earned) – $400 (NSF checks) – $300 (Service charges) = ($600)
91. If a credit memorandum appears on a bank reconciliation, this could be an indication that there has been a
a. decrease the company's bank account.
b. bank service charge.
c. customer's NSF check.
d. note receivable collected by the bank for the company.
ANSWER: d
AICPA: FN-Reporting
Chapter 6
92. A check drawn by a company for $360 in payment of a liability was recorded in the journal as $630. 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
93. If receipts from cash sales of $7,500 were recorded incorrectly as $5,700 in the company’s books, then this item
would be included on 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: d
94. Annual reports must include an internal control report. In this report, which group has the primary responsibility for
establishing and maintaining an adequate control structure and procedures for financial reporting?
a. Management
b. The company’s CPAs
c. The company’s internal audit staff
d. The audit committee of the company’s board of directors
ANSWER: a
DIFFICULTY: Easy
AICPA: FN-Reporting
Chapter 6
95. Which of the following is not a requirement of the Sarbanes-Oxley Act?
a. A company's annual report must include an internal control report.
b. External auditors can no longer provide human resource services.
c. External auditors can no longer provide brokerage services.
d. An internal control system that guarantees financial accuracy must be established.
ANSWER: d
AICPA: FN-Reporting
96. Which of the following is not a requirement of a company’s external auditors under the Sarbanes-Oxley Act?
a. They must give an opinion that the company maintained an effective internal control system over financial
reporting.
b. They must design and implement an effective information system design.
c. They cannot perform any brokerage services for the company.
d. All of these are requirements of a company’s external auditors the Sarbanes-Oxley Act.
ANSWER: b
AICPA: FN-Reporting
97. Which of the following represents the subset of board of directors that acts as a direct contact between stockholders
and the independent accounting firm?
a. External auditors
b. Internal audit staff
c. Audit committee
d. Stockholders’ representative
ANSWER: c
AICPA: FN-Reporting
Chapter 6
98. The Sarbanes-Oxley Act requires that the audit committee be composed of
a. at least 50 percent of key officers who are on the board of directors.
b. a majority of all of the members of the board of directors.
c. the outside members of the board of directors and the external auditor.
d. entirely outside members of the board of directors.
ANSWER: d
AICPA: FN-Reporting
99. Which of the following represents a group composed of key officers of a corporation and outside members responsible
for the general oversight of the affairs of the company?
a. Board of directors
b. Internal audit staff
c. External auditors
d. Audit committee
ANSWER: a
AICPA: FN-Reporting
100. Which of the following statements is true?

a. The audit committee provides contact between the board of directors and the key officers of the company.
b. The audit committee has become less involved in the financial accounting system as a result of the Foreign
Corrupt Practices Act.
c. The audit committee is a subset of individuals on the board of directors that acts as a direct contact between
the stockholders and the independent accounting firm.
d. The board of directors consists of the company's external auditors.
ANSWER: c
DIFFICULTY: Challenging
AICPA: FN-Reporting
Chapter 6
101. What five-member body created by the Sarbanes-Oxley Act was given authority to set U.S. auditing standards?
a. FASB
b. SEC
c. IAS
d. PCAOB
ANSWER: d
DIFFICULTY: Easy
AICPA: FN-Reporting
102. Which of the following is a sound internal control procedure for cash disbursements?
a. Making copies of purchase orders for the receiving department so they know how many items to be expected
upon delivery.
b. Using presigned checks to facilitate payment within the cash discount period.
c. Comparing purchase requisitions, purchase orders, receiving reports, and invoices.
d. Requiring the signature of the purchasing department supervisor on checks.
ANSWER: c
AICPA: FN-Reporting
103. An internal control system consists of all of the following policies and procedures except those necessary to ensure
a. the safeguarding of an entity’s assets.
b. that cash on hand and on deposit in checking accounts is beyond the minimal amount for ongoing operations.
c. the reliability of an entity's accounting records.
d. the accomplishment of an entity's overall objectives.
ANSWER: b
AICPA: FN-Reporting
Chapter 6
104. Which of the following situations 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 ordering inventory and receiving it from the shipper.
ANSWER: d
AICPA: FN-Reporting
105. The group within an organization that is responsible for monitoring and evaluating the internal control system is
called the
a. audit committee.
b. internal audit staff.
c. board of directors.
d. accounting staff.
ANSWER: b
AICPA: FN-Reporting
106. Which of the following statements does not describe the responsibilities of a company’s internal audit staff?
a. Internal auditors ensure that the company’s financial statements have been presented fairly.
b. Internal auditors focus on the efficiency with which the organization is run.
c. Internal auditors help ensure that the company’s policies and procedures are followed.
d. Internal auditors periodically review both accounting and administrative controls.
ANSWER: a
AICPA: FN-Reporting
Chapter 6
107. Which of the following is considered one of the six most important internal control procedures?
a. Computerized accounting systems
b. The board of directors
c. Proper authorizations
d. Verification by government agencies
ANSWER: c
DIFFICULTY: Easy
AICPA: FN-Reporting
108. Which of the following is not a generally recognized internal control procedure?
a. Establishing of clear lines of authority to carry out specific tasks
b. Physically counting inventory in a perpetual inventory system
c. Reducing the cost of hiring seasonal employees
d. Limiting access to computerized accounting records
ANSWER: c
AICPA: FN-Reporting
109. Which of the following is not a generally recognized internal control procedure?
a. Internal review by the audit committee of the board of directors
b. Independent verification of the work of one employee by another employee
c. Independent review and appraisal by internal auditors
d. Segregation of duties
ANSWER: a
AICPA: FN-Reporting
Chapter 6
110. Allowing only certain employees to order goods and services for the company is an example of what internal control
procedure?
a. Segregation of duties
b. Safeguarding of assets and records
c. Independent verification
d. Proper authorizations
ANSWER: d
AICPA: FN-Reporting
111. Which internal control procedure is followed when management authorizes the purchasing department to order goods
and services for the company?
b. Safeguarding of assets and records
ANSWER: d
AICPA: FN-Reporting
112. Which internal control procedure is followed when the work of one department acts as a check on the work of
another?
b. Safeguarding assets and records
ANSWER: c
AICPA: FN-Reporting
Chapter 6
113. Which internal control procedure is followed when storage areas are secured with limited access?
a. Segregation duties
ANSWER: b
AICPA: FN-Reporting
114. Which internal control procedure is followed when a physical count of inventory is performed in a perpetual
inventory system?
ANSWER: c
AICPA: FN-Reporting
115. Which of the following is not considered a business (source) document?

a. Time card
b. Purchase order
c. Sales invoice
d. Schedule listing all of the insurance policies in force
ANSWER: d
AICPA: FN-Reporting
Another random document with
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disturbances of bladder function have been described as vesical
crises, and recent French observers have observed so-called crises
clitoridiennes in female tabic patients which were characterized by
voluptuous sensations. All of these symptoms have these in
common: that they last but a short time, that their disappearance is
as rapid as their advent, and that they depend for their distribution on
the attitude of the disease in the cord. The vesical crises are more
apt to occur early than late in the disease and where the belt
sensation is in the hypogastric region. The gastric and enteric crises
are usually found when the belt is in the epigastric level, and the
bronchial, cardiac, and laryngeal crises when it is in the thorax and
neck. Some connection has been observed between the occurrence
of the lightning-like pains and these crises. Thus, a sudden cessation
of the former is sometimes the forerunner of the latter. It is also
found that one variety of these crises disappears to give way to
another: this is particularly noticed with the bronchial crises, which
often cease suddenly, to be followed by vomiting.
22 Krause, in a paper read before the Society of Neurologists at Berlin
(Neurologisches Centralblatt, 1885, p. 543), found either laryngeal crises or other
laryngeal symptoms, such as demonstrable ataxia of movement of the vocal cords, in
13 out of 38 cases. This proportion would be far too high for tabes in general; his
cases were probably advanced ones. He established the interesting fact that the
laryngeal crisis may sometimes be provoked by pressure with a probe on the superior
laryngeal nerve at its laryngeal entry-point. Jastrowitz claims to have determined the
existence of actual paralysis of the vocal cords with the crises, but Krause concludes
from the experimental inductibility of the crisis that it cannot be due to a posticus
paralysis. In a discussion on the subject Remak affirms that a unilateral paralysis of
the crico-arytenoideus posticus may be an early or the earliest symptom of tabes. It
seems, however, that in all cases where he determined such paralysis there had been
disturbances of function of other cranial nerves in unusual severity at about the same
time.
23 They must be extremely rare: they have not occurred in a single one of my 81
private cases, nor do I recall one in clinic or dispensary experience.
There is some analogy between the exceptionally-occurring mental
disturbance of tabic patients and the crises. Like them, it resembles
a disturbance of innervation, in this instance the centres regulating
the cerebral circulation appearing to be at fault. It also seems as if in
cases of this character the direction of the mental disturbance were
determined in some sense by the emotional relations of the
oblongata, for the insane outbreak usually consists in a brief but
extreme outburst either of a depressed and melancholiac or an
expansive maniacal or delirious outburst. It is a very rare occurrence,
and usually limited to the latest stages. Much more common is the
development of paretic dementia, but this is to be regarded rather as
a complication than an integral feature of tabes. Most tabic patients
retain their mental equilibrium to the last moment; some develop
truly heroic resignation to their terrible sufferings and gloomy
prospects; and a few, becoming irritable, petulant, and abnormally
selfish, show the effect of invalidism manifested equally with other
chronic diseases.
In addition to the visceral crises there are other disturbances of

innervation of a nutritive or trophic character which are characteristic
of tabes. There is scarcely one of the eruptions or other changes
which are attributable to central nervous disease which may not
occur at some one or other period of this disease. Thus, herpetic
eruptions may occur independently or in conjunction with lancinating
pains, in one case even corresponding to the area of the belt
sensation. Discoloration of the skin or hair, the latter turning gray or
white in circular24 or in irregular patches, spontaneous falling of the
nails, spontaneous hemorrhages in the matrix of the nail,
ichthyosis,25 purpura, diffuse œdemas, localized perspiration
sometimes associated with sudamina and accompanied by
ecchymoses, muscular atrophies, bullæ, and pemphigus-like
eruptions, have been noted by various observers. As yet, they are to
be regarded rather as clinical curiosities than as constant features,
as diagnostic criteria, or as presenting special indications for
treatment. The trophic disturbances affecting the bones and joints
and a peculiar ulcerative process known as the perforating ulcer of
the foot are better studied, and, ranking among the most formidable
and striking manifestations of tabes, merit special consideration. The
tabic joint affection, first described by Charcot as a trophic
manifestation of tabes, is usually located in the hip or knee, but
almost any joint, including the temporo-maxillary articulation, may be
its seat. The earlier or lighter forms consist in serous exudations with
or without active local manifestations resembling those of synovitis;
but the commoner and graver form consists in actual deformity of the
articular surfaces, such as enlargement or atrophy, sometimes
supplemented by the formation of osteophytes. In addition,
spontaneous dislocations occur in a manner which is often quite
surprising.26 As a type of such an occurrence the following may
serve: A tabic patient presented a synovial swelling of the left knee
of truly enormous dimensions; as soon as this became reduced a
distinct crepitus was elicited, and both the femoral and tibial articular
surfaces found enlarged. The whole process occupied only a few
days; the lateral ligaments were then found so relaxed that the leg
could be freely moved in every direction.
24 Rossolymmo, Archiv für Psychiatrie, xv. p. 727. I have never observed this
symptom as beautifully developed as in a case of spinal irritation, in which the
possibility of the existence of any organic disease could be positively excluded.
Bulkley has observed albinism.
25 In three cases by Ballet et Dutil, Progrès médicale, May 19, 1882.
26 Boyer (Revue de Médecine, 1884, p. 487) records a case where the hip became
luxated spontaneously as an early symptom.
The connection between the morbid process in the spinal cord and
these remarkable arthropathies is as yet unexplained; and as
Charcot's original proposition, that they can be always referred to
lesions in the anterior horns of the gray matter, has not been
sustained, some of the German clinicians, notably Strümpell, are
inclined to attribute them, in part at least, to ordinary results and
accidents due to the anæsthesia and its disturbing effect on
voluntary and automatic joint protection. A controversy arose which
was participated in by the Clinical Society of London,27 and evoked
opinions from nearly all the eminent neurologists of Europe. The
result of this thorough discussion has been to establish the joint
affection as a true tabic symptom due to the same morbid process
which underlies the less enigmatical symptoms of the disease. One
of the best reasons for regarding these joint lesions as of trophic
origin is the fact that they are associated with textural bone-changes
by which they become either unduly soft or brittle, and therefore
exposed to apparently spontaneous fracture. Cases of fracture of
almost every long and some of the short bones are recorded, among
the most remarkable being one by Dutil,28 where fracture of the
radius occurred without adequate cause in the initial period of tabes;
and one by Krönig,29 in which the patient, who had been tabic for
eight years, broke a lumbar vertebra while catching himself in the act
of falling down stairs.
27 The question was formally raised by Morrant Baker at the December meeting in
1884, and the discussion participated in by Charcot himself. Among the opponents of
Charcot's theory were Jonathan Hutchinson and Moxon, the latter of whom
administered a sound and well-merited criticism regarding some of the premature, if
not sensational, announcements of the distinguished French neurologist. He
compared the joint lesions of tabes to decubitus: just as the latter can be avoided by a
proper protection of the exposed parts, so the former would not occur if the joints
could be kept in a, surgically speaking, normal state. Moxon seems to have forgotten,
in suggesting this comparison, that there is a form of decubitus which will occur
independently of the greatest care and in spite of every measure taken to arrest it,
and which can be attributed only to an obscure but active perversion of nervous
nutritive control. Barwell, Paget, Herbert Page, Broadbent, and McNamara agreed
that the joint lesions are not of surgical or rheumatic origin, but essentially signs of the
nervous affection. Although Barwell's claim, that the rheumatic and tabic joint
diseases are essentially different, because the former is hyperplastic and the latter is
atrophic, is not borne out by all cases of tabic joint disease, some of which are
certainly hyperplastic, yet the other reasons advanced for regarding these affections
as distinct, and considering the joint affection of Charcot as a trophic disorder, far
outweighed those advanced by the opponents of this view. In fact, the only ground the
latter had to stand on was the fact that Charcot's asserted anatomical foundation was
found to be chimerical.
28 Gazette médicale de Paris, 1885, No. 25.

29 Zeitschrift für klinische Medizin, 1884, vii., Suppl. H.
Another reason for considering the arthropathies as of central origin

is their chronological association with other signs whose trophic
origin cannot be disputed, such as unilateral sweats and œdemas
and visceral crises. They are also found to correspond in many
cases to the lancinating pains both in location and time.
The feet of an advanced tabic patient usually appear deformed; the

extremities of the bones, particularly at the metacarpo-phalangeal
articulation, are thickened, and the axis of the foot as a whole is
bent. It is a question how far this deformity may be due to persistent
faulty innervation of the muscles going to the foot and to ensuing
mechanical influences. A most pronounced deformity found in a few
cases has been designated by Féré as the tabic foot.30 It consists in
the thickening of the tissues on the inner side of the foot, obliterating
its arch in such a manner that in standing the plantar surface is
everywhere in contact with the floor. With this the tarso-metatarsal
and the metacarpo-phalangeal joints of the great toes appear greatly
swollen.
30 Pied tabétique—Revue de Médecine, 1884, p. 473.
There is less dispute concerning the nature of the so-called

perforating ulcer of the foot. This lesion occurs only in cases where
the central or peripheral nervous apparatus is diseased; thus, it may
occur with neuritis, and it is therefore unanimously regarded as due
to morbid nervous influences. In tabes it may follow an exacerbation
of the fulminating pains. It consists in a swelling of the tissues of the
foot; the skin becomes firm and thickened; deep sinuous ulcers are
then developed, showing but slight if any tendency to granulate, and
which extend down to the bone, the latter usually remaining
unaffected.31 In a few cases more remarkable accidents due to
disturbed nutrition have been noted. Thus, J. Hoffmann records a
subcutaneous rupture of the Achilles tendon, and in another case the
spontaneous discharge of all the teeth of the upper jaw within about
a week's time.32
31 Like most of the manifestations of advanced tabes, the perforating ulcer may occur
exceptionally as a pre-ataxic symptom. Thus, Suckling (British Medical Journal, 1885,
April 4, p. 693) mentions its preceding the development of tabes proper by one year.
32 Berliner klinische Wochenschrift, 1885, No. 12. In this unique case the loosening
and falling out of the teeth preceded the tabes by a year. Demange, who observed the
same phenomenon in two cases, found that the ascending root of the fifth pair was
involved. The only analogous observation in my experience relates, like the bleaching
of the hair in circular patches, to a case of spinal irritation: here the gums and alveolar
borders underwent atrophy, exposing the roots of the teeth to beyond the normal
alveolar border: first the right upper row, then the right lower row, and finally the teeth
on the left side in the same order, showed this condition; only the most posterior fell
out.
COURSE.—Tabes dorsalis is to be regarded as an extremely chronic

affection. Its development, as previously stated, is insidious,33 and
the symptoms demonstrating the advent of the disease may be so
slight for many years that the patient does not regard himself as ill or
as likely to become so. In this condition he may remain for ten or
more years; and there are cases recorded where the exact signs of
the incipient stage were well marked, and yet no ascertainable
progress was made in a period of such long duration that the
inference naturally follows of a much longer prospective period in
which the patient would not have become ataxic. There may be
distinguished two forms of invasion: the more frequent is marked by
the development of the terebrating, fulgurating, and fulminating
pains, to which, sooner or later, the abolition of the pupillary and
certain other deep reflexes is added. In the vast majority of cases
they are found absent when the physician's attention is directed to
the question of the existence of spinal disease. In about one-fifth of
the cases pain is at no time a prominent feature of the disease, and
may be, as is established by the cases cited, entirely absent. In
these patients the first symptoms noted are muscle-tire on slight
exertion. Usually, the evidences of disturbed sensation and
innervation begin in one extremity or preponderate in it, but
symmetry is soon established. The same is noticed in the extension
of the morbid process: when the ulnar distribution is involved—which
is the first danger-signal on the part of the cervical enlargement of
the cord—usually one side is first involved, but the other soon
follows, and becomes affected in equal or nearly equal degree. In
the overwhelming majority of cases the disease manifests itself in
the lower extremities first, remaining limited to them for a long
period, and if extending to the upper extremities doing so in much
slighter intensity than in the lower. Gull, Leyden, and others have
observed cases where the arms were first and chiefly involved; but
this is extremely rare. Cases of a simultaneous involvement of the
upper and lower extremities are more frequently noted. The
symptoms detailed above are developed in varying order in different
patients, and the line has been already indicated which separates
the progressive from the episodial features of the disease. Even in
the ataxic period the patients may remain in a comparatively
stationary period for many months and years.34 The general bodily
nutrition is usually good, and the muscular strength, as such, rarely
affected to any noteworthy extent until the extreme phase of the
disease is reached. Even the formidable-appearing crises and
trophic disturbances, though occasionally fatal, are not always so.
The direct danger from the disease proper, so far as life is
concerned, is in the possible development of cystitis and pyelitis, of
the malignant bed-sore, and of delirium and coma, the latter of which
is occasionally found to be due to cerebral hemorrhage—a lesion
which some writers regard as possibly due to some impalpable
influence of the spinal disease on the cerebral circulation.35
33 Cases of acute locomotor ataxia have been described. In no instance are they pure
or typical, and the last case of the kind published in America, beginning, as it is
evident from the account, with signs of general myelitis, illustrates the impropriety of
utilizing one or a few symptoms as determining nomenclature.
34 Thirteen patients are now under my observation, or I have been able to obtain
reliable medical information concerning their condition, who have been in the ataxic
period since the date of my first examination, varying from a year to seven years ago.
Not one of these patients is materially much worse than at that time. Two only died,
both being bedridden at the time they came under observation. Of the first group,
three have shown more or less lasting improvement in respect to special symptoms,
as will be detailed in connection with the treatment.
35 In a case of sudden death, with an asthma-like seizure, of a tabic patient under the
charge of T. A. McBride, I found an intense injection of one (the right) vagus nucleus,
the color of the ala cinerea and of the nucleus on section being almost black.
MORBID ANATOMY AND PHYSIOLOGY.—Our knowledge of the structural

disease underlying the symptoms which comprise the clinical picture
of tabes dorsalis is perhaps the clearest in the domain of spinal
pathology. Not alone the commencement of the morbid process and
every stage of its subsequent encroachment on the spinal cord, but
also its relations to special symptoms, have been demonstrated in
numerous cases by some of the most careful German and French
investigators.
In advanced cases of tabes the disease of the spinal cord is so

evident that it was noted even by earlier observers, the region of the
cord lying between the posterior nerve-roots being altered in color,
consistency, and dimensions. It is gray instead of white, hard instead
of soft, and considerably shrunken. The gray discoloration of the
surface appears to be complete in the lumbar and lower dorsal
region; it is less intense in the upper dorsal and cervical part of the
cord; and often shows a division into three streaks, of which one, in
the middle line, occupies both columns of Goll, while on either side
another extends in the inner side of the posterior root-entry. The
posterior roots themselves are frequently atrophied, and exhibit a
firmer consistency and darker color than in health. On making cross-
sections of the spinal cord it is found that the gray discoloration
extends inward, involving more or less of the posterior columns in
well-defined areas. Microscopic examination shows that the myelin
of the nerve-tubes is either destroyed or atrophied, and the axis-
cylinder is found to be affected in the same way, usually presenting
alterations in its refraction and diameter where it is not entirely
destroyed. In the maximum foci of disease the conducting elements
of the cord are nearly destroyed, and their place is occupied by a
firm connective substance made up of wavy bundles, enclosing here
and there a few atrophied axis-cylinders with wasted myelin-sheaths.
The blood-vessels participate in the morbid process, at least as far
as the larger vessels are concerned: these are sclerotic, their lumen
appears contracted, the adventitial sheath is hypertrophied and
occupied by a nucleated, fibrillar connective substance. The
capillaries are sometimes normal, or participate in the morbid
process to the extent of a thickening of the extra-endothelial sheaths
which is either hyaline or fibrillary, and may show inflammatory cell-
proliferation. It is evident that the increase of connective tissue in the
posterior columns is not merely a relative one, due to the
condensation of the normal neuroglia after the disappearance of the
normal nerve-tubes, but is the result of actual proliferation. Opinion is
somewhat divided as to whether this is to be considered as an
inflammatory interstitial proliferation or as a more passive
development of tissue compensating for the destroyed conducting
elements. My own observations incline me to the belief that in
syphilitic tabes the morbid process is essentially interstitial, while in
non-syphilitic tabes it is parenchymatous, the disease beginning in
the nerve-tubes proper. Perhaps the controversies between
pathologists as eminent as Schultze, Tuczek, Rumpf, Zacher,
Kahler-Pick, Rosenstein, and Adamkiewicz—who are rather evenly
divided into opposing camps, one maintaining the parenchymatous,
the other the interstitial, origin of the disease—may be solved when
we learn to distinguish between the non-syphilitic and syphilitic
cases, which is clinically, as yet, impossible. The difficulty of deciding
what is a parenchymatous and what is an interstitial disease of the
cord is considerably enhanced by the fact that the neuroglia, which
by some at least is regarded as an interstitial connective tissue, is
derived, like the nerve-substance proper, from the upper or neuro-
epidermic germ-layer of the embryo, and not from the mesoblast,
which furnishes all other connective substances in the body.
It is regarded as well established that the sclerosis of the areas of

the spinal cord which are affected is preceded by a stage of granular
degeneration.36 This is supported by the facts that the sclerotic areas
are surrounded by a zone in which sclerosis has not yet developed,
but which is in a state of granular degeneration, and that in more
advanced tabes this belt is also found sclerosed. In paretic
dementia, a disease whose complicating cord affection closely
resembles that of locomotor ataxia, a granular degeneration of the
posterior columns is very common in earlier periods, while in later
periods a sclerotic tissue is found in the same locality.
36 Westphal, Archiv für Psychiatrie, ix. p. 725.
I regard these observations as opposed to the assumption of

Strümpell that tabes is a system-disease of the cord in the sense in
which he employs that term. In his fascinating and suggestive thesis
on the systemic affections he cites the observations of Tuczek made
on the posterior sclerosis ensuing from ergotism as confirming his
view that special systems of nerve-fibres are separately vulnerable
to special morbid influences. The remarkable correspondence
between the topographical distribution of the lesion of ergotin tabes
described by Tuczek and the characteristic areas of sclerosis found
in the column of Burdach in ordinary tabes, seems to justify a very
different conclusion. Ergot exerts its morbid influence through a
disturbance of nutrition. Just as it produces gangrene by constriction
of the nutritive vessels of the fingers and of whole extremities, so it
produces interference with nutrition of those nerve-elements in the
cord which are most liable to suffer from general arterial constriction.
These are presumably those portions which are supplied by the
longest and narrowest arterial stems—a condition obtaining in
precisely those parts of the cord which are affected both in ergotin
tabes and in ordinary tabes.
It has also been supposed that the morbid process began in the
posterior roots and crept in with these, thence extending upward.37
This view is opposed by the fact that there is no constant relationship
between the root lesion and the cord lesion; the sclerosis of the root-
zones within the columns of Burdach I found to be absolute in at
least one case where the outer nerve-roots were not distinctly
affected.38
37 Takacs is the most recent defender of this view.
38 The root lesion may, like that of the column of Goll, according to a minority of the
interpreters, be a secondary process, for in ergotin tabes (Tuczek) both are usually
intact.
In typical tabes the sclerotic process begins in a special triangular

field of the posterior column in the lumbar enlargement of the cord.
The innermost of the posterior rootlets run through this field, which
has been designated by the French school as the posterior root-
zones, and the rootlets become exposed to all the vicissitudes which
the conducting tracts are destined to undergo in consequence.
Throughout the remainder of the cord it is the involvement of the
root-zone which indicates the advance of the affection upward. At a
time when the lesion is comparatively slight in the cervical level,
manifesting itself by a slight grayish or reddish streak to the naked
eye, a faint, pale discoloration in chromic-acid specimens, a deeper
stain in carminized, and a pallor in sections stained by Weigert's
method, the affected part in the lumbar region has undergone great
shrinkage; scarcely a single myelin-tube is preserved to receive
Weigert's stain within the affected area; the latter involves nearly the
entire field between the cornua, and absorbs carmine deeply, so that
it is difficult to differentiate the gray and white substance in
carminized sections. A small part of the posterior column which most
closely adjoins the posterior (gray) commissure remains free in all
cases; so also does a small laurel-leaf-shaped field bisected by the
posterior median septum. Examination with higher magnifying
powers, aided by the modern improved methods of preservation and
staining, reveals that the gray substance of the posterior segment of
the cord is usually more or less diseased. In advanced cases the
gelatinous as well as the spongy part of the posterior gray horn, and
even the posterior gray commissure, undergo such considerable
atrophy that they may occupy but half the normal area. In some
cases the columns of Clarke appear to be involved quite early in the
disease.39
39 Leyden discovered the degeneration in the fibres which in part make up these
columns and correctly traced its origin to the posterior rootlets. Lissaner and Zacher
(Archiv für Psychiatrie, xv. p. 437) confirmed him, the latter finding, as Leyden was the
first to discriminate, that the cells may escape while the fibres are materially
diminished. Krause claims that the columns of Clarke are constantly affected, but not
necessarily in their entire length, the higher levels appearing quite normal at a time
when the lower are severely involved (Neurologisches Centralblatt, 1884, p. 50).
The triangular field in the lumbar part of the posterior column, which
is one of the typical starting-points of the affection, contains those
ascending nerve-bundles which in their cephalic course emancipate
themselves from the column of Burdach and constitute the slender
columns of Goll. The result is that the degenerative process creeps
up these columns at the same time that it ascends in the root-zones
and deep portions of Burdach's columns. Some authorities regard
this as a mere extension by contiguity;40 others incline to consider it
a secondary degeneration. It may extend to the medulla oblongata,
becoming lost in the level where the nucleus of the column of Goll
terminates, and is accompanied, at least in those advanced cases in
which the upper extremities are involved, by a comma-shaped area
of degeneration in the adjoining part of the column of Burdach, which
similarly extends into the oblongata and terminates slightly more
cephalad. In typical advanced tabes, therefore, the cross-section of
the cord exhibits a characteristic distribution of the sclerosis in each
level. As this distribution is associated with certain constant
symptoms, it is permissible to attempt bringing certain features of the
lesion in relation with special features of the disease symptoms. The
posterior gray horns and the posterior white columns, together with
other fibre-systems connected with them, are much more
complicated in structural and physiological relations than the
corresponding anterior structures. The relations of the anterior
rootlets to the gray substance, and those of the motor ganglionic
elements to their controlling tracts, are comparatively simple; those
of the posterior roots are very intricate. They run up, in great part, at
an angle to the longitudinal tracts; a few pass in directly, and still
fewer dip to a lower level. The result is that a section of the cord
made in the longitudinal direction through the root-zones, so as to
pass from the root-entry to the anterior commissure, shows the
column and root-fibres to be woven into each other like a plait.
Trabeculæ of connective tissue, dragged in as it were with the
posterior roots, fill up the interstices of this labyrinth. They are
particularly dense in the lowest part of the lumbar enlargement of the
cord, constituting the so-called posterior processi reticulares. It is
reasonable to suppose that the overlapping of ascending and
descending root-fibres, associated with the presence of an extra
amount of connective tissue, imbedded as this fibre-maze is in that
part of the cord which is most distant from its lymphatic emunctories,
affords a favorable soil for slow inflammatory trouble. This is the
primary field of tabic sclerosis, and in it the disease may remain most
intense for years, extending but slowly and with diminishing intensity
upward, hand over hand, as it were, on the natural ladder which the
intertwined fasciculi and their matrix constitute. The longitudinal
tracts which lie in and near the root-zones belong to the so-called
short fibre systems, uniting the segments of higher and lower levels
of the cord with each other. As the sclerotic process ascends it
involves the caudal ends of these systems: they consequently
undergo secondary degeneration, and, shrinking in their turn, affect
the caudal part of the next system above in the same manner. The
morbid process in the column of Burdach may therefore be
considered as a combination of inflammatory and degenerative
changes, the inflammatory products causing a series of short
ascending degenerations, and the vulnerable path thus established
being followed by a cirrhotic condition in which the connective and
vascular structures participate actively. With regard to the reasons
for regarding the degeneration of the column of Goll and that of the
comma-shaped field near it as a secondary process due to the
cutting off of its apparent nerve-supply at the caudal end, and of the
posterior nerve-roots or their provisional terminations, they may be
stated in this way: When the lesion of the primary field is limited to
the lower lumbar or sacral part of the cord, the degeneration of the
column of Goll is limited to its postero-internal part; when the upper
lumbar and lower dorsal cord is involved, the entire tract is affected;
and when the cervical portion is diseased, the supplementary
comma-shaped area degenerates. In other words, the projection
tract of the sciatic nerve, as far as it is represented in Goll's column,
suffers in the first, that of the crural nerves in the second, and that of
the brachial nerves in the third instance. In all advanced cases of
tabes the affection of the column of Goll is in direct proportion to the
altitude of the lesion in the primary field. Symptomatically, it bears an
equally constant relation to the ataxia.41 No case is on record in
which these columns were totally degenerated without some motor
inco-ordination of the lower extremity having been observed during
life; and no case is recorded in which brachial ataxia had been a
marked and persistent feature in which the comma-shaped area—
area of the column of Burdach—was healthy.
40 It is held by them that the histological character of the change of the columns of
Goll is not different from that in the column of Burdach. Zacher (Archiv für Psychiatrie,
xv. p. 435) urges that it does not resemble true secondary degeneration, beginning in
the vessels and connective substance instead of the nerve-fibres. Schultze (ibid., xiv.
p. 386), on the other hand, recognizes a primary involvement of the nerve-fibres in
both of the areas of fascicular degeneration in tabes. The observation of intact axis-
cylinders by Babinski in the sclerotic fields is in conflict with the latter's claim, and the
various differences of observation and interpretation seem to be reconcilable only on
the assumption that there are two different modes of origin, both leading to nearly the
same results and occasionally combined in one and the same case.
41 Krause's case and others show that the ataxia of movement is not influenced by
lesion of the column of Clarke; but we are not informed as to the static equilibrium of
the patients in whose cords these columns were found intensely affected.
It is scarcely necessary to seriously consider the suggestion of

Strümpell, that the lesion of the column of Goll is in relation with the
bladder disturbance.42 Cases are on record by Wolff and others
where this lesion was intense and there was little or no bladder
disturbance.43
42 Archiv für Psychiatrie, xii.
43 The column of Goll is not present in those mammals which, like the porpoise, have
no developed hind limbs, but these animals have urinary bladders.
If the disease of the column of Goll were a primary systemic affection

independent of the disease of the root-field, it would be difficult to
understand why it, as well as the likelihood of finding a
corresponding degeneration of the direct cerebellar tract, increases
with the extent to which this field is involved. This occurrence
becomes quite clear when we remember that both the direct
cerebellar tract and that of Goll, being centripetal, are under the
trophic dominion of the posterior nerve-roots. The opinion is not
distinctly expressed, but implied in some writings, that the column of
Goll degenerates because of a general transverse cord lesion at a
low level; this is not the case in the tabic cord. There is a difference
in appearance between that part of the primary field which
corresponds to the column of Goll in the lumbar cord and the
surrounding sclerosis in early cases: it is more intensely
degenerated, more homogeneous in appearance, and more evenly
stained. The other part of the triangular field presents a more
trabecular appearance. In the specimen represented in the
accompanying figure this is easily recognized: the darker field
corresponds exactly with the ascending degeneration, which follows
compression of the cauda equina,44 and is the sciatic equivalent of
the column of Goll.
FIG. 31.
Trans-section of Upper Lumbar Cord of a Patient moderately advanced in

Tabes: f, ventral or anterior fissure; g, caput gelatinosum; r r′, entry and
deep course of the posterior rootlets; d, degenerated field, including the
origin of the tracts which in higher levels form the columns of Goll; n, field
near the posterior commissure which remains free from degeneration,
both in the lumbar and cervical cord; s, sharply marked leaf-shaped field,
bisected by posterior septum, which, as claimed by Strümpell and shown
in this case, remains free from disease; z, zone of nearly normal
consistency around it; a, diseased field, suspected to be related to the
analgesia, not usually affected in early tabes; v, fibres running up and
down in front of the gelatinous substance; *, region where the tabic
process sometimes begins.
44 I have also found that this field corresponds to the column of Goll in its myelinic
development: the lumbar part of this column—designated as such by Flechsig—is an
entirely different tract, which enjoys a remarkable immunity from disease in tabes.
As illustrating the bearing of the lesion of the column of Goll on the motor ataxia I may
refer to two cases which happen to be related side by side by Strümpell (Archiv für
Psychiatrie, xii. p. 737, Cases 1 and 2). As far as the lumbar segment of the cord is
concerned, the distribution of the lesion is similar; but in the one presenting marked
motor ataxia the triangular field was slightly diseased, and there was no upward
extension of the lesion in the column of Goll. In the other, with marked ataxia, the
triangular field was intensely diseased, and ascending degeneration (?) occurred in
the sciatic fields of the latter.
In support of the view that the comma-shaped area in Burdach's columns is

homologous with the fibres of the column of Goll, it is to be advanced that
degeneration of this field bears the same relation to symptoms in the distribution of
the ulnar nerve that degeneration of the column of Goll bears to sciatic and crural
symptoms. Where the initial pains and subsequent tactile and locomotor disturbance
were severe, this field was found affected, and most so in the side where the
symptoms had been most intense (Friedreich-Schultze's cured cases, Archiv für
Psychiatrie, xii. p. 234). This area has no direct connection with the root-fields.
Secondly, in a primary system disease of the column of Goll, associated with
degeneration of the nucleus of the column of Goll, described by Scoli, an irregular
encroachment of the column of Burdach was noted. Third, the innermost fibres of the
column of Burdach (those belting the nucleus in the oblongata) have the same
relation to the interolivary layer which the column of Goll has through its provisional
nucleus of termination.
While the evidence of high lesion of the cerebral continuation of the column of Goll,
and, what I regard as its homologue, the comma-shaped area of Burdach, together
with the constant association of marked degeneration of these columns with motor
ataxia, is strong positive proof of its relation to this symptom, there is equally strong
evidence negativing its relation to any other of the prominent symptoms of tabes
dorsalis. Thus Babesin (Virchow's Archiv, lxxvi. p. 74) found degeneration of the
posterior columns limited to the column of Goll, and the patellar reflex was not
destroyed; the root-fields at the upper lumbar levels were intact. That the columns of
Goll have been found profoundly affected without bladder disturbance has been
stated previously, and constitutes a stronger argument against Strümpell's view than
the frequent observation of bladder trouble in spinal diseases, along with which these
columns may be entirely free.
Among the various constituents of the posterior columns which

appear to present a relative immunity to the disease, aside from the
area near the posterior commissure and the laurel-leaf-shaped area
of the posterior septum, Strümpell noted one which is situated at the
periphery of the cord, bordering on the entry-line of the posterior
roots and the inner contour of the posterior roots. In the few cases
where it was found destroyed there was, what is a comparatively
rare thing in moderately severe tabes, complete analgesia. It is not,
however, certain that there is a necessary connection between the
pathological and clinical fact here. The nerve-roots themselves are
involved within the diseased area of the root-zones. The lesion is
one of a kind which, affecting a nerve-trunk, would produce first
irritation of, then impediment to, and ultimately destruction of, its
function. The clinical parallel to this is the occurrence of the lightning-
like pains in the earlier phases of the disease, which are followed by
delayed pain-conduction, and finally by loss of sensation. Of the
rootlets or fibres subservient to the various sensory and reflex
functions mediated by the posterior roots, those which convey the
centripetal impression normally evoking the patellar jerk appear to be
the most vulnerable, or, because of their limited number, the earliest
to be destroyed or compressed, with the result of total functional
paralysis.45
45 It is now conceded that, as Westphal claimed, the patellar jerk is always abolished
when the upper lumbar level of the root-zones (bandelettes externes of Charcot) is
involved. Tshirijew has shown that the translation of the knee-jerk reflex occurs in a
single segment of the rabbit's cord at the homologous level. In transverse sections a
distinct fascicle may be seen coursing from the innermost root-fibres toward the
antero-intermediate cell-group of the anterior horn; it furnishes a pictorial substratum,
if not anatomical proof, for the patho-physiological observation, and harmonizes with
the fact that it is the innermost rootlets which usually suffer first. Perhaps the delicacy
of this tract accounts for the frequent disappearance of the jerk in old people as a
result of senile sclerosis.
With regard to the interpretation of the various tactile sensory

disturbances of tabes and the delayed pain-sense conduction little
positive advance has been made. That the lesion of the root-zones
and gray substance is responsible for them seems to be the general
conclusion of French and German observers. Recent researches
have shown that disease of the peripheral nerves (multiple neuritis)
may produce sensory phenomena which it had previously been
customary to regard as pathognomonic of disturbance of their
intraspinal terminations and continuations. At the same time, we are
confounded by the observation of Erb, that even retardation of
conduction of the pain-sense, which the dictum of Schiff taught us to
regard as a sign of disturbed function of the spinal gray matter, is
also produced by peripheral neuritis.
Immediately adjoining the gelatinous apex of the posterior horn there

is a column of vertical fibres which bear a relation to it resembling
that of the ascending root of the fifth pair in the oblongata to the
tuber cinereum of Rolando. Sclerosis of this column, as well as of
the ascending root in question (Demange), has been found in tabes,
and usually in association with pronounced trophic disturbances. In a
number of cases (Oppenheim, Eisenlohr, and others) where
spasmodic laryngeal crises had been a marked feature during life,
lesion of the floor of the fourth ventricle, or atrophy of the
pneumogastric nerve, or even of its nucleus, was found. In one case
with marked gastric crises I found sclerotic changes of the arteries in
the ala cinerea.
With regard to the involvement of the peripheral nerves proper, aside

from the optic, opinion is somewhat divided. The discovery of
multiple neuritis, and the recognition of the fact that it had been
erroneously confounded with tabes, led Dejerine to claim that tabes
might be of peripheral origin. He even proposed to account for the
oculo-motor trouble on the basis of an affection of the oculo-motor
nerves. This explanation has been repudiated by Westphal and
sound authorities generally. That the peripheral nerves are
occasionally involved in tabes was already known to Friedreich in
1863,46 and later Westphal found the cutaneous branches in an
advanced tabic patient to present similar changes to those
discovered by Friedreich: these findings are confirmed by his
Japanese pupil, Sakaky. The nerve-tubes are atrophied, the axis-
cylinder being often preserved, and the interneural connective
substance is proliferated. But there is no constant relation between
these changes and the symptoms of the disease; in one of Sakaky's
cases the nerves of an extremity which had been the seat of severe
sensory symptoms were entirely normal. The findings in the
peripheral nerves of tabic subjects lose much of their value in view of
their recent discovery in marantic persons47 advanced in life, but who
had no nervous disease whatever.
46 Virchow's Archiv, vol. xxvi. pp. 399-452.
47 Krause, Neurologisches Centralblatt, 1885, p. 53.
It has been attempted to bring the tabic process in relation to a

supposed primary meningitis. Tabes is a rather common nervous
affection, and primary spinal meningitis is one of the very rarest. The
leptomeninges are found considerably thickened in one out of ten
tabic cords, and those who defend the meningitic origin of the
disease base their theory on this inconstant finding, and allege that
in the cases where it is absent the meningitis has disappeared while
the cord lesion progressed. It is a fatal objection to this view that the
part of the posterior columns immediately adjoining the pia is often
quite free from disease. A meningitic affection, either as an
etiological or a complicating factor, can be admitted in those cases
only where there is a marginal sclerosis.
The changes in the optic nerve resemble those of the white columns
of the cord in their naked-eye and minute character as well as in the
controversial nature of the various interpretations made. When
affected, the nerve is found to be firmer than normal, and discolored;
later it becomes quite gray, and may eventually shrink to two-thirds,
and even less, of its normal diameter. It is generally believed that, as
in the cord, the myelin undergoes wasting before the axis-cylinder
disappears, and that the latter may survive a long time, thus
explaining why the patient may retain his visual power for a
considerable period after the ophthalmoscope determines the
existence of atrophy. No satisfactory explanation has as yet been
offered for the optic-nerve affection of tabes. There is no direct
continuity of the spinal and optic sclerosis. Two theoretical
possibilities suggest themselves. The first is that the lesion of the
cord exerts a remote effect upon the physiological, and through this

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Using Financial Accounting Information

The Alternative to Debits and Credits

1. A six-month bank certificate of deposit would be classified as a cash equivalent.

32. A company’s internal control system is designed by its external auditors.

35. Independent verification can be effective in preventing collusion.

40. Which of the following assets is considered the most liquid?

41. Which of the following items is not included in cash?

42. Which of the following is not considered to be a cash equivalent?

44. Which of the following could never be considered to be cash equivalents?

45. Which of the following is not a cash equivalent?

53. Which of the following items would not be a reconciling item?

Fazzi’s book balance $46,200

Busch’s book balance $15,000

61. When preparing a bank reconciliation, deposits in transit are

63. When preparing a bank reconciliation interest earned on a checking account is

64. When preparing a bank reconciliation, outstanding checks are

Bank statement balance $19,500

71. Which of the following is an example of a credit memorandum?

80. An outstanding check is a check that

Rahm’s book balance $32,800

Bank statement balance $1,089

Lola’s book balance $35,900

Lola’s adjusted cash balance at February 28, 2017 is

Gentech’s bank balance $14,300

Bank statement balance $29,600

Bank statement balance $29,600

Bank statement balance $45,000

What is the adjusted cash balance at the end of April?

Bank statement balance $45,000

Bank statement balance $30,700

100. Which of the following statements is true?

115. Which of the following is not considered a business (source) document?

In addition to the visceral crises there are other disturbances of

25 In three cases by Ballet et Dutil, Progrès médicale, May 19, 1882.

28 Gazette médicale de Paris, 1885, No. 25.

Another reason for considering the arthropathies as of central origin

The feet of an advanced tabic patient usually appear deformed; the

There is less dispute concerning the nature of the so-called

COURSE.—Tabes dorsalis is to be regarded as an extremely chronic

MORBID ANATOMY AND PHYSIOLOGY.—Our knowledge of the structural

In advanced cases of tabes the disease of the spinal cord is so

It is regarded as well established that the sclerosis of the areas of

I regard these observations as opposed to the assumption of

In typical tabes the sclerotic process begins in a special triangular

It is scarcely necessary to seriously consider the suggestion of

If the disease of the column of Goll were a primary systemic affection

Trans-section of Upper Lumbar Cord of a Patient moderately advanced in

In support of the view that the comma-shaped area in Burdach's columns is

Among the various constituents of the posterior columns which

With regard to the interpretation of the various tactile sensory

Immediately adjoining the gelatinous apex of the posterior horn there

With regard to the involvement of the peripheral nerves proper, aside

47 Krause, Neurologisches Centralblatt, 1885, p. 53.

It has been attempted to bring the tabic process in relation to a

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