The Accounting for Warranty Cost Is Based on the Expense

question 36

Multiple Choice

The accounting for warranty cost is based on the expense recognition principle which requires that the estimated cost of honoring warranty contracts should be recognized as an expense

• A) when the product is brought in for repairs.
• B) in the period in which the product was sold.
• C) at the end of the warranty period.
• D) only if the repairs are expected to be made within one year.

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Definitions:

Available

Accessible or at hand; able to be used or obtained.

Syllogism Valid

An argument form with two premises and a conclusion, valid if the conclusion logically follows from the premises.

Accounting Error

A mistake in the recording, categorization, or calculation of financial transactions.

Existential Import

The implication that at least one instance of the subject in a categorical proposition exists.