All of the Following Statements Related to Recording Warranty Expense

question 53

Multiple Choice

All of the following statements related to recording warranty expense are true except:

• A) Recording estimated warranty expense complies with the full disclosure principle.
• B) Warranty costs are probable and the amount can be estimated.
• C) Warranty expense should be recorded in the period when the warranty service is performed.
• D) Recording estimated warranty expense complies with the matching principle.
• E) The seller reports a warranty obligation as a liability.

Describe the rights of obligors and assignees after an assignment.

Distinguish between different types of third-party beneficiaries.

Understand the legal effects and requirements for assignments and delegations.

Identify situations where third-party beneficiaries cannot enforce agreements.

---

Definitions:

Enforceable

A term referring to a contract or agreement that can be legally compelled or executed according to its terms.

Binding Contract

an agreement between two or more parties that is enforceable by law, committing all involved to fulfill their obligations.

Perform

To carry out, execute, or do an action or activity.

Competent

Having the necessary ability, knowledge, or skill to perform a task effectively or to make legally binding decisions.