Which of the Following Statements Is INCORRECT Concerning Warranties

question 21

Multiple Choice

Which of the following statements is INCORRECT concerning warranties?

• A) Using the expense approach, the warranty is provided with the product or service with no additional fee.
• B) Where warranty costs are immaterial or when the warranty period is quite short, the warranty costs may be accounted for using the cash basis.
• C) Using the revenue approach, the warranty is a separate deliverable from the related product or service.
• D) The revenue approach must be used for income tax purposes.

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Definitions:

Testable

A quality of a hypothesis that allows it to be proven true or false through experimentation or observation.

Predictions

Predictions are statements or claims about what will happen in the future, often based on observation, data analysis, or theoretical modeling.

Critical Thinking

Thinking that does not blindly accept arguments and conclusions. Rather, it examines assumptions, discerns hidden values, evaluates evidence, and assesses conclusions.

Existing Evidence

Existing evidence refers to the body of already available data, observations, or established facts that can support or refute a hypothesis or claim.