During Year 1,its First Year of Operations,Benitez Co

question 69

Multiple Choice

During Year 1,its first year of operations,Benitez Co.reported sales of $800,000.At the end of Year 1,the company estimated its warranty obligation at 3% of sales.During Year 1,the company paid $13,000 cash to settle warranty claims.Which of the following statements is true?

• A)Warranty expenses would decrease net earnings by $24,000 in Year 1.
• B)Cash decreased by $13,000 as a result of the accounting events associated with warranties in Year 1.
• C)The warranties payable account has a credit balance of $11,000 at the end of Year 1.
• D)All of these answer choices are correct.

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Definitions:

Consequences

The outcomes or results that directly follow from an action or decision, whether they are intended or unintended.

Accountability

The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

Liability

The state of being responsible for something, especially in terms of legal or financial obligations.

Aadhaar

A 12-digit unique identity number issued by the Indian government to residents based on their biometric and demographic data.