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:

Court System

The organizational structure of courts that interpret the law, decide lawsuits, and adjudicate criminal offenses, typically organized in a hierarchy from local to supreme courts.

Code of Judicial Conduct

A set of ethical guidelines designed to ensure that judges conduct themselves in a manner that promotes public confidence in the integrity and impartiality of the judiciary.

ABA

An abbreviation for the American Bar Association, a professional organization for attorneys in the United States that provides education, accreditation, and advocacy.

Partisan Judicial Elections

Electoral processes for judges where candidates are affiliated with and often endorsed by political parties.