# If a company has three lots of products for sale, purchase 1 (earliest) for \$17, purchase 2 (middle) for \$15, purchase 3 (latest) for \$12, which of the following statements is true? A. This is an inflationary cost pattern. B. This is a deflationary cost pattern. C. The next purchase will cost less than \$12. D. None of these statements can be verified.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 10, Problem 2MC
Textbook Problem
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## If a company has three lots of products for sale, purchase 1 (earliest) for \$17, purchase 2 (middle) for \$15, purchase 3 (latest) for \$12, which of the following statements is true?A. This is an inflationary cost pattern.B. This is a deflationary cost pattern.C. The next purchase will cost less than \$12.D. None of these statements can be verified.

To determine

Concept introduction:

Periodic Inventory System:

The periodic inventory system records and updates the inventory at the end of a particular period. The inventory balance is not updated after each transaction and it is updated periodically.

Perpetual Inventory System:

The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

To choose:

The true statement

### Explanation of Solution

Explanation for correct answer:

The given purchase costs are showing decreasing trend, hence this is a deflationary cost pattern. Hence the correct option is B.

Explanation for incorrect answers:

A...

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