Concerning Accounting for Warranties, Which of the Following Statements Is

question 91

Multiple Choice

Concerning accounting for warranties, which of the following statements is false?

• A) The GAAP approach of accruing warranty expense and the related liability) in the year of the sale is not an acceptable method for federal income tax purposes.
• B) The modified cash basis is the most conceptually sound method for financial reporting.
• C) In accounting for service-type warranties, companies much report warranty expense in the period of sale.
• D) The modified cash basis recognizes warranty expense when cash is paid for the repairs to merchandise under warranty.

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