What Is the Accounting Principle Underlying the Recognition of an Estimated

question 54

Multiple Choice

What is the accounting principle underlying the recognition of an estimated liability for warranties in the period of product sale?

• A) Matching
• B) Materiality
• C) Full Disclosure
• D) Conservatism

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Definitions:

Budgeted Units

An estimate of the quantity of goods or services that an organization plans to produce or sell in a specific period.

Planning Budget

A budget developed for various levels of activity, forecasting revenue and expense figures based on different production or sales volumes.

Net Operating Income

The profit a company generates from its regular business activities, excluding deductions for interest and taxes.

Units

A measurement or quantity of something considered as a standard measure, in business often referring to a single item of a product.