hapter8 InvtoisKEY TERMS bak rconcilian Teanalysis tadtail the itemresponsiblefor the dferenc wen the cashbale repord i he bnk statemet and the alance th csh ount i theldger. ank stemen A summary of al rasatn miled to th eosit rmdvailableonle b ban eah thcashCoins, curen （papr mony）, che, moy orders, nd money depit that is availafr unrestricted withawl rom aks and the fnanca instiutnscasequivalnts ihl iudnvestmentsth ar uually eorted with ah on th ane sheet.casort and oer acount n ctwhihasrecordd errs i cash sales o errorsinmkng change usingthe amunt of atualas o ad to ffr frothbegini amout o cash plu t cas slesf day.copenati baae A ruiremnt someas reuiin depors t maintin iniumcas balance n tei bnk acco elemetsf inernl ctol Te conol evirnnt, ris sessment，ontrol ctivities,infrtionad cmuication,nd mnitrn. employee fraud Tintentnl at ofdeceign employe forperonal gain. iterna ctros he olisaprcdres ued to sagudsses， ensur acuraesne informatin, and nsure complancewih law nd regultions. ptty cahfnd Ascial cash fundtopay reltivelysmal amunts. specia-prpse undA cashfnd udfor eclbusines need. vouche Aspecia fmfr eoing eleandta about a liability and detils ois paymen. ouher ystm A setofrocdure for hozng ndreco liailis andcashyents E PNT1.escibe th effet of intor errors n e fnncil temens.Anerro inrepoting nntor basd p th physic ivetorywil msstatt eng inetory, current asset, tal as， nd ttl stkoldes quty (rained rings） n t alacesheet. additon，the costof ods sol， gospoft,a incmewil e mistated n he income sttet. 2. Descib threeinvetrycstlow assumpios nd ho heyimpctheincoe stemnt and alnehet.The thr commn cot flo assumposusedn busiess are th(）firstin，frst-tmethod,(2) st-i, firs-out ethod， and (3） avre cst mtho. ach method omalyyieldsdiffernt amunts or the os ofmerchandse sld and e ndigechandise invento Ths, the choice fa co flo sumpton iectlyfcts e ncm statmentanalnce see. 3. Comarhe ue fth thre noting metods.The thre invetoy osi meths will nomly yilddiferent amons fo(） te endng ivnty,（2)th ost of he merhandise sld or theprod, and (3) te go prfit(an net nome)for teperid. Duri eos of inflaion,h ffomethod yields the lowest amufoth cot of mchase old, e hihst amut fo gross proft (annt ncome）, adhe hihest mont for hding vntr. The fo method yelds theoposite esulsringerod of deflin，he predin efecs are rvrsed Te avergeomeod ilds result ta rebeween toe offio anlifo. 4. Etimt he cost of invntr, usng th rai mthod nd tegss proit meod.In using th reilmetho to iate inventory, the etal prices fallmrchandse aquier acumlae.he invetortrtal isterid by edting sales rt perod rome retai ri of the goods that were aailabe for ale dringthe perd. The inventr at rtail i tn coerted to cst one sis of te rat o cos t selling（retail)pricforhemechandise available for ale. n sin the oprofit mhotoesimat iney, t esimate gross profitis dductedrom the ales to denethe estimae cost o meandise od.hs amounisthn deucedfrom he ot of mrchadisevailable or sale t etmin te tatededinginvenory. EECIFosil specializes n iner acher and laer goods. AssumFsbea neholdig 10witwathesthat cst5 ach. Fosil sells thes wathes fr 100eachDring Jne, Fil bouh and sold invenory a folws：Jun3 d8 unior$00ech16 Pased 10 nit for 523 o unts for $10 eachRquirent1. Prepar aerpealinvtory reordfo Fssi ner:FFO LIFO erag CotRonunt o to he nearest cen adlo unts to h nearst dollar.2. Jurnali al of Fosil nvenory trasacios frJune d l threecosn methos.3. Sw th omptatnofgross rofitf each metod.4. Whic meod maxiizesnet icme?Whchethodminmizes income taxes?Anwer：1 FIFOWrstthes DaterhaesCost of GodssoldInv