Concerning Accounting for Warranties, Which of the Following Statements Is

question 102

Multiple Choice

Concerning accounting for warranties, which of the following statements is true?

• A) The expense warranty accrual method is the only method accepted for federal income tax purposes.
• B) The modified cash basis is the method used for for tax reporting.
• C) The sales warranty accrual method uses a percentage of completion approach to warranty revenue recognition.
• D) The modified cash basis recognizes warranty expense when cash is received on the sale.

---

Definitions:

Ambiguous Situations

Circumstances or scenarios that lack clear interpretation or can be understood in more than one way.

Social Referencing

The process by which individuals look to others in their environment for cues on how to react or behave in unfamiliar situations.

Infancy

The period of very early childhood, characterized by lack of complex speech; the first 2 years after birth.

Goodness Of Fit

The compatibility between an individual's temperament and the demands or expectations of their environment.