The Auditor for Universal Tools,Inc

question 282

Multiple Choice

The auditor for Universal Tools,Inc.discovered in 2017 that the warranty liability account showed a $25,000 debit balance.She investigated and discovered that the 2% estimate for warranty expense was recorded and understated,and it was more likely 3.5%.Sales for 2017 were $5,500,000.She should make which one of the following entries?

• A) Warranty Expense 25,000
• B) Warranty Liability 82,500
• C) Warranty Expense 82,500
• D) Warranty Liability 192,500

Understand the role of self-assessment in personal and professional development.

Recognize and apply strategies for effective goal-setting.

Identify and adapt to various learning styles and personality types.

Implement strategies for coping with anxiety and improving time management.

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Definitions:

Debt to Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its shareholders' equity.

Total Liabilities

The sum of all financial obligations a company owes to outside parties, including both short-term and long-term debts.

Total Equity

The total net value of a company, calculated as the difference between total assets and total liabilities, representing the ownership interest of the shareholders.

Working Capital

The difference between a company’s current assets and current liabilities, indicating the short-term financial health and operational efficiency.