The Matching Principle Requires Businesses to Report Warranty Expense ________

question 59

Multiple Choice

The matching principle requires businesses to report 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 long-term assets section of the balance sheet

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Definitions:

Accounts Receivable

Receivable sums by a business from its patrons for items or services delivered without formal settlement.

Debt-Equity Ratio

A proportionality indicator for assessing how company assets are funded through debt and equity.

Total Debt Ratio

A financial metric that compares an organization's total liabilities to its total assets, used to assess its leverage and financial health.

Total Debt Ratio

A financial ratio that compares a company's total liabilities to its total assets, indicating the proportion of a company's assets financed through debt.