12. A CPA examines a sample of copies of December and January sales invoices for the initials of the person who verified the quantitative data and the consistency between prices on purchase order and invoice. This is an example of a:

A) Substantive test with respect to the completeness of revenue.

B) Cutoff test.

C) Tests of internal control.

D) Statistical test.

13. Which of the following revenue related transactions is not linked to the accounts indicated?

A) Recognize revenues too early--accounts receivable and revenue.

B) Understate allowance for doubtful accounts--Bad debt expense, allowance for doubtful accounts.

C) Don't write off uncollectible receivablesaccounts receivable, sales discounts.

D) Don't record discounts given to customers--Cash, sales discounts, accounts receivable.

14. Which of the following is necessary if the auditor can plan to observe inventory at interim dates rather than the end of fiscal year?

A) Perpetual inventory records are maintained.

B) Complete recounts are performed by independent teams.

C) Unit cost records are integrated with production-accounting records.

D) The company adopted a sophisticated Peachtree-based accounting system.

15. Effective internal control for purchases generally can be achieved in a well-planned organizational structure with a separate purchasing department that has:

A) The ability to prepare payment vouchers based on the information on a vendor's invoice.

B) The responsibility of reviewing purchase orders issued by user departments.

C) The authority to make purchases of materials and services.

D) A direct reporting responsibility to controller of the organization.