Describe how the matching principle applies to contingent liabilities (hint: warranties).
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Describe how the matching principle applies to
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- What are the three elements of the definition for liabilities? List from the following items that are classified as liabilities and explain why, or why not, they are classified as liabilities:a) Provision for warrantyb) Unearned revenuec) GST payabled) Allowance for doubtful debtse) A disputable lawsuit looking for expert's opinionHow are the terms “probable,” “reasonably possible,”and “remote” related to contingent liabilities?What are Contingent Liabilities? Give an example. What are the factors that determine the reason for Contingent Liabilities?
- 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 liabilityTrue (t) or False (f) _____ Contingent liabilities should be recorded in the accounts if there is a remote possibility that the contingency will actually occur)