Using the Revenue Approach of Accounting for Product Guarantees and Warranty

question 75

Multiple Choice

Using the revenue approach of accounting for product guarantees and warranty obligations

• A)the liability is measured at the estimated cost of meeting the obligation.
• B)there is no effect on future income.
• C)the liability is measured at the value of the services to be provided.
• D)the liability is measured at the value of the services to be provided, but there is no
• Effect on future income.
• Non-Financial and Current Liabilities 13- 13

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Definitions:

Replenishment

The process of replenishing inventory or stock to ensure that the optimal inventory level is maintained.

Auxiliary Petty Cash Record

A detailed ledger used to track the small cash expenditures handled through a petty cash fund.

Office Expense

Costs associated with the day-to-day operations of an office, including supplies, utilities, and administrative salaries.

Insurance Expense

The cost associated with purchasing insurance policies for the business, considered an operating expense.