Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
Cornerstones of Financial Accounting
Current And Contingent Liabilities. 81.2C

# Warranty Expense: A company may issue warranty with the sale of its product which bounds the company to replace or repair in case of quality failure according to the terms of the warranty. The provision for the estimated warranty liability is made at the time of sale of the products and warranty expense is recorded. This provision is utilized at the time of performing the warranty contract. Current Ratio: Current Ratio is measure of the company’s ability to pay off its current liabilities using its current assets. It is calculated by dividing the total current assets by total current liabilities. The formula of the current ratio is as follows: C u r r e n t R a t i o = C u r r e n t a s s e t s C u r r e n t l i a b i l i t i e s To indicate: The decision for Jim.

Question
Chapter 8, Problem 81.2C
To determine

## Concept introduction:Warranty Expense:A company may issue warranty with the sale of its product which bounds the company to replace or repair in case of quality failure according to the terms of the warranty. The provision for the estimated warranty liability is made at the time of sale of the products and warranty expense is recorded. This provision is utilized at the time of performing the warranty contract.Current Ratio:Current Ratio is measure of the company’s ability to pay off its current liabilities using its current assets. It is calculated by dividing the total current assets by total current liabilities. The formula of the current ratio is as follows:Current Ratio=Current assetsCurrent liabilitiesTo indicate:The decision for Jim.

### Want to see the full answer?

Check out a sample textbook solution
Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning