Sales Made in Fiscal 2016 for $50,000,000 Include a 5

question 50

Multiple Choice

Sales made in fiscal 2016 for $50,000,000 include a 5 year warranty coverage.The estimated cost for warranty is expected to be 2% for the first 4 years and 5% for the last year.Determine how much warranty expense will be recorded in fiscal 2016.

• A) 1,000,000
• B) 4,000,000
• C) 5,000,000
• D) 6,500,000

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Definitions:

Permanent Endowment

A donation of money or property to a nonprofit organization, which uses the resulting investment income for a specific purpose.

Fundraising Activities

Efforts undertaken by an organization to generate voluntary financial contributions from individuals, businesses, charitable foundations, or governmental agencies.

Conditional Contribution

A donation made with specified terms that must be met for the contribution to be retained by the recipient.

FASB

The Financial Accounting Standards Board (FASB) is an independent organization responsible for establishing accounting and financial reporting standards for companies and non-profit organizations in the United States.