Value Tools, Inc

question 13

Multiple Choice

Value Tools, Inc., sells tools, tool parts, and related supplies under "full" warranties. Under the Magnuson-Moss Warranty Act, this means that Value Tools must provide

• A) a choice between a refund or replacement if a product cannot be fixed and repair or replacement of defective parts.
• B) neither a choice of a refund or replacement, or repair of defective parts.
• C) only a choice of a refund or replacement if a product cannot be fixed.
• D) only repair or replacement of defective parts.

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Definitions:

Accounting Standards for Private Enterprises

Specific accounting principles and guidelines meant for the financial reporting of privately-held companies, differing from those for publicly traded companies.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee’s profits or losses.

Journal Entries

Records of financial transactions in the accounting system.

Impairment Loss

The amount by which the carrying amount of an asset exceeds its recoverable amount, leading to a decrease in the asset's value on the financial statements.