Estimating a Warranty Expense in the Same Period as the Sales

question 46

Multiple Choice

Estimating a warranty expense in the same period as the sales revenue is recognized is an example of:

• A)the recognition criteria for revenues.
• B)the matching objective.
• C)the full-disclosure principle.
• D)conservatism.

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Definitions:

LIFO Assumption

An inventory costing method that assumes the last items purchased are the first ones sold (Last In, First Out).

FIFO Assumption

Stands for First-In, First-Out, an inventory costing assumption where the first items purchased are the first ones to be sold.

Inventory Count

The process of physically counting the items in stock to verify the accuracy of inventory records.

Balance Sheet

A financial statement that shows the assets, liabilities, and stockholders' equity of a company at a specific point in time.