A Firm Sells Products Covered by a Three-Year Warranty

question 66

Multiple Choice

A firm sells products covered by a three-year warranty.From the past experience of the other firms in the industry,the firm expects to incur warranty costs equal to 1% of sales.Firm sales were $40,000 and $50,000 in 2013 and 2014 respectively.In 2014,the firm spent $200 to repair goods sold in 2013,and $300 to repair goods sold in 2014.The firm received no warranty servicing demands from customers in 2013,the firm's first year of operations.What is the balance in the warranty liability account on January 1,2014?

• A) $400
• B) $500
• C) $300
• D) $0

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Definitions:

Major Body Systems

The collective group of essential organ systems in the human body, including the circulatory, respiratory, digestive, nervous, and others, which work together to sustain life.

Sensory Input

Information that the body gathers from the environment via the senses, including sight, sound, touch, taste, and smell.

Stereotype Threat

The thought in a person’s mind that one’s appearance or behavior will be misread to confirm another person’s oversimplified, prejudiced attitudes.

Ageist Beliefs

Ageist beliefs are prejudicial views and stereotypes that are based on the age of an individual, often leading to discrimination.