If a Variance Is Considered to Be Random or Not

question 8

True/False

If a variance is considered to be random or not expected to recur the appropriate management action is to delete the variance from the accounting records.

---

Definitions:

Modified Cash Basis

A method of accounting that combines elements of both cash and accrual accounting, recording most transactions on a cash basis, but also incorporating the accrual basis for significant items.

Warranty Expense

Costs associated with the obligation to repair or replace defective products sold to customers, recognized as a liability.

Estimated Liability

A probable future outflow of resources, arising from past transactions or events, the amount of which is not certain.

Cash Discounts

A reduction in invoice amount offered by sellers to buyers as an incentive for early payment.