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

---

Definitions:

Profit Sharing

A compensation strategy where employees receive a portion of the company's profits, aligning their interests with the financial success of the business.

Gain-Sharing

A plan that allows employees to share in cost savings or productivity gains realized by their efforts.

Net Profits

The financial gain attained by a business after subtracting all operating expenses, interest, taxes, and any other necessary expenditures from its total revenue.

Fringe Benefits

Fringe benefits are additional advantages or compensations provided to employees on top of their regular salary, such as health insurance, paid vacations, and retirement plans.