1)The internal control depends on different principles such as:

• Principles of separation

The financial and accounting details must separately deal with different persons.

• Principles of responsibility

The responsibility of everyone should be clearly specified in the company.

• Principles of skepticism

No need to apply overconfidence to one individual to avoid any fraud.

• Principles of rotation

The transfer of people from one position to another must be inflexible.

• Principle of review

The work of the employees must be checked by another employee.

• Principle of clarification

Rules and regulations should be clearly followed when deals with cash.

• Principle of documentation

The work should be arranged in an orderly manner and it should be passed through different people.

2)The correct answer is option d. office maintenance.

Under Section 263a of the US tax code that contains the Uniform Capitalization, a cost related to inventory must be capitalized.

• Option a. is incorrect. Marketing costs are selling cost, and is not capitalizable.
• Option b. is incorrect. Distribution costs are are also selling expenses.
• Option c. is the correct answer. The cost incurred for warehousing add values to the inventory, hence, it is capitalizable.
• Option d. is incorrect. Office maintenance is an administrative costs that do not qualify for inventory capitalization.

3)The policy ineffectiveness (PIP) refers to a new classical theory established by Neil Wallace and Thomas Sargent in 1975. They proposed it based on logical expectations that employment and levels of output in the economy can't be controlled by monetary policy. However, before this proposal, macroeconomic theories based their findings on adaptive expectations assumption. Therefore, the policy ineffectiveness explains that due to the rational expectations of individuals, policies that attempt to manipulate the economy by creating false expectations might hinder the economic underlying trends. In return, it doesn't affect the economy.