Information Obtained Prior to the Issuance of the Current Period's

question 31

Multiple Choice

Information obtained prior to the issuance of the current period's financial statements of a company indicates that it is probable that,at the date of the financial statements,a liability will be incurred for obligations related to product warranties on products sold during the current period.During the past three years,product warranty costs have been approximately 1 1/2 percent of annual sales revenue. An estimated loss contingency should be

• A) neither accrued nor disclosed in the financial statements.
• B) recognized as an appropriation of retained earnings.
• C) accrued in the accounts and reported in the financial statements.
• D) disclosed in the financial statements but not accrued.

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Definitions:

Preapproach Process

The planning and research phase in sales where information about the prospect is gathered before the first meeting.

Value Analysis

A systematic approach to improving the value of products or services by examining function, reducing costs, and ensuring no compromise on quality or performance.

Sales Call

A direct interaction, either in person or over the phone, between a salesperson and a potential customer aimed at promoting and selling a product or service.

Selling Process

A series of steps taken by a salesperson to lead a potential customer towards purchasing a product or service.