Indicate Whether Each of the Following Statements Is True or False

Question

Examlex · Accepted Answer

The Answer is a)T b)F c)F d)F e)T
a)This is true.Warranty expense is generally estimated as a percentage of sales.
b)This is false.A warranty obligation occurs whenever a warranty is offered,whether the customer pays extra or not.
c)This is false.When a warranty claim is settled,the related entry decreases assets (cash)and liabilities (warranties payable).It does not affect expenses,net income,or stockholders' equity.
d)This is false.Settling a warranty claim decreases assets (cash)and liabilities (warranties payable).
e)This is true.Although the amount and timing of warranty obligations are uncertain,warranties usually represent liabilities that must be reported in the financial statements.

Indicate Whether Each of the Following Statements Is True or False

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