'No Rust' Car Sales Provides a One Year Labour and Parts

question 32

Multiple Choice

'No Rust' car sales provides a one year labour and parts warranty with every car sold and at the start of 2012 had a provision of $16 000 to cover warranty claims. On 30 March 2012 $2700 was paid out for repairs for vehicles under warranty. What is the correct accounting entry to record the payment of the claims?

• A) Debit warranty expense $2700; credit provision for warranties $2700
• B) Debit provision for warranties $2700; credit bank $2700
• C) Debit provision for warranties $2700; credit warranty expense $2700
• D) Debit warranty expense $2700; credit bank $2700

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Definitions:

Ethical Principles

Fundamental guidelines that dictate behavior, ensuring actions and decisions are morally right and benefit both individuals and society as a whole.

Personal Ethics

The set of formal or informal ethical principles that an individual uses to guide their ethical decisions.

Societal Ethics

Principles and standards that guide behavior within society, reflecting beliefs about what is acceptable or unacceptable, right or wrong.

Consumer Buying Patterns

The purchasing habits of individuals or groups, often analyzed for marketing and business strategy.