1. If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is:

A. Periodic

B. Average

C. LIFO

D. FIFO

2. When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

A. Monitoring

B. Risk Assessment

C. Proof and securities measure

D. Separating responsibilities for related operations

13. A bank reconciliation should be prepared periodically because

A. The bank must make sure that its records are correct

B. The bank has not recorded all of its transitions

C. The companys records and the banks records are in agreement

D. 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

14. 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.

15. Which of the following would be deducted from the balance per books on a bank reconciliation?

A. Service Charges

B. Deposits in transit

C. Outstanding checks

D. Notes collected by the bank