The Matching Principle Requires Businesses to Record Warranty Expense

question 41

Multiple Choice

The matching principle requires businesses to record Warranty Expense:

• A)in the same period that the company records the revenue related to that warranty.
• B)in the period prior to which the company records the revenue related to that warranty.
• C)in the period after the related revenue is recorded.
• D)in the contingent liabilities section of the balance sheet.

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Definitions:

Consent

Consent is the voluntary agreement to or approval of a proposal or action, typically after having knowledge of relevant facts and implications.

Lessee

A person or entity who leases or rents property from another called the lessor.

Patent Holder

An individual or entity that legally owns the rights to an invention as recognized by a patent.

Assignee

An individual or entity to whom rights or interests have been transferred by another, known as the assignor.