All of the following statements related to recording warranty expense are true except: Multiple Choice Warranty expense should be recorded in the period when the warranty service is performed. Warranty costs are probable and the amount can be estimated. The seller reports a warranty obligation as a liability. Estimated warranty expense is recorded when revenue from the sale of the product or service is reported. Recording estimated warranty expense requires a debit to Warranty Expense

All of the following statements related to recording warranty expense are true except: Multiple Choice Warranty expense should be recorded in the period when the warranty service is performed. Warranty costs are probable and the amount can be estimated. The seller reports a warranty obligation as a liability. Estimated warranty expense is recorded when revenue from the sale of the product or service is reported. Recording estimated warranty expense requires a debit to Warranty Expense

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 15MCQ

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6- All of the following statements related to recording warranty expense are true except: Top of Form Multiple Choice Warranty expense should be recorded in the period when the warranty service is performed. Warranty costs are probable and the amount can be estimated. Estimated warranty expense is recorded when revenue from the sale of the product or service is reported. The seller reports a warranty obligation as a liability. 0r Recording estimated warranty expense requires a debit to Warranty Expense.
What accounts are used to record a contingent warranty liability that is probable and estimable buthas yet to be fulfilled?A. warranty liability and cashB. warranty expense and cashC. warranty liability and warranty expense, cashD. warranty expense and warranty liability
Warranty liability is an estimate based on past warranty claims. How might a company determine how much to accrue for warranty? Why might it change the accrual?
2. Which of the following best describes the accounting for assurance-type warranty costs? * 1 point a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
The expense for warranty costs is recorded in the period ________. A. when cash is paid to repair or replace the product B. when the product is sold C. when the product is repaired or replaced D. when cash is collected from the sale of the product
Describe the accounting treatment for an assurance-type warranty and for a service-type warranty.
The expense for warranty costs is recorded in the period ________.
19. Which of the following best describes the accounting for assurance-type warranty costs? * a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
When do businesses record warranty expense, and why?
Statement 1: Under an assurance-type warranty, companies charge warranty costs only to the period in which they comply with the warranty. Statement 2: For purposes of recognizing a provision, “probable” is defined as more likely than not. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect.
When do businesses record warranty expenses, and why?
FAST The recording of a product warranty expense in the year the merchandise under warranty is sold is supported by the a. Business entity concept b. Matching principle c. Recognition principle d. Realization principle