A Firm Is Required to Estimate a Liability for Repairs

question 148

Multiple Choice

A firm is required to estimate a liability for repairs for products sold with a warranty.If the firm's accountants later find that the estimated amount for repairs has been overstated,the correct accounting procedure is to

• A)make an adjusting entry to reduce the amount of estimate.
• B)make a correcting entry because the overstatement is an error.
• C)show the amount of overstatement on the income statement as a loss.
• D)do nothing for the year in question and modify the next year's estimate.

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Definitions:

Personal Characteristics

The distinguishing traits, qualities, or attributes that make up an individual's personality and behavior.

Performance Objectives

Specific, measurable goals set to gauge the efficacy of employees, training programs, or business strategies in achieving desired outcomes.

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Free time in which one is not working and can engage in leisure activities or rest.

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A type of résumé format that emphasizes an individual's skills and experience over chronological work history.