The Accounting Principle Requiring That a Company Record the Warranty

question 64

Multiple Choice

The accounting principle requiring that a company record the warranty expense in the same period that it records sales revenue is the:

• A)consistency principle.
• B)historical cost principle.
• C)matching principle.
• D)stable-dollar principle.

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Definitions:

Total Cost

The complete cost of production, including both fixed and variable costs, to manufacture a product or deliver a service.

Processing Department

A division within a manufacturing operation where a specific type of processing or assembly is completed.

Equivalent Units

A measure used in process costing that converts partially completed units into a smaller number of fully completed units.

First-in

Typically refers to the "First-In, First-Out" (FIFO) inventory method where the oldest inventory items are recorded as sold first.