What Business Transaction Must Occur in Order to Reduce Estimated

question 4

Multiple Choice

What business transaction must occur in order to reduce Estimated Warranty Payable?

• A)Goods under warranty are repaired in the period after the sale
• B)Warranty costs are accrued at the end of the accounting period
• C)Sale of goods on account
• D)Customers take advantage of cash discounts for early payment

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Definitions:

Total Liabilities

The sum of all financial obligations or debts owed by a company to external entities or individuals.

Asset on Credit

An asset acquired by a company through borrowing or on terms that allow for deferred payment.

Accounts Receivable

Money owed to a business by its customers for goods or services sold on credit, typically collected within a short time period.

Individual Asset

A single item of property, whether tangible or intangible, that is owned and has value to the entity holding it.