Under the Warranty Expense Approach, There Should Be No Income

question 42

True/False

Under the warranty expense approach, there should be no income statement effects for warranty repairs performed after the year of sale (assuming that accrued warranty expenses and expenditures equal one another).

---

Definitions:

Profit

The financial gain achieved when the revenue from business activities exceeds the expenses, costs, and taxes involved in maintaining the operation.

Operating Loss

A financial metric representing the negative balance resulting from a company's operating expenses exceeding its revenues.

Variable Cost

Costs that change in proportion to the level of activity or volume of goods produced, such as raw materials and labor expenses.

Fixed Costs

Expenses that remain constant regardless of the amount of output or sales, including costs like lease payments, wages, and insurance premiums.