Warranty Expense Is Recognized in the Same Period That the Sales

question 177

True/False

Warranty expense is recognized in the same period that the sales revenue is recognized because of the conservatism principle.

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Definitions:

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use.

Provision

An amount set aside in the accounts of a company to cover a future liability or decrease in the value of an asset.

Accounts Receivable

Liabilities of customers to a firm for provisions or merchandise that have been delivered but payment is outstanding.

Capital Balance

The amount recorded in a shareholder's or partner's equity account, reflecting their investment in the business.