Which of the Following Accounting Principles Requires That Warranty Expense

question 102

Multiple Choice

Which of the following accounting principles requires that warranty expense must be estimated and recognized in the same period when the related sales revenue is recognized?

• A) the matching principle
• B) the disclosure principle
• C) the revenue principle
• D) the consistency principle

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Definitions:

AVC

The average variable cost is calculated by dividing the total variable costs by the produced output quantity.

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of output.

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the variable cost per unit.

Average Total Cost

The total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs.