Indicate Whether Each of the Following Statements Is True or False

question 86

Short Answer

Indicate whether each of the following statements is true or false.
_____ a) The amount of warranty expense is an estimate that is based on the amount of merchandise sold.
_____ b) A warranty obligation only occurs if a buyer purchases an extended warranty.
_____ c) When a warranty claim is made, the seller's equity decreases.
_____ d) When a warranty claim is settled, the seller's liabilities decrease.
_____ e) Product warranties usually represent legal liabilities that must be reported in the financial statements.

---

Definitions:

Spending Increases

A rise in the amount of money spent by consumers, businesses, or the government on goods and services.

Federal Budget Deficit

is the financial shortfall when the government's expenditures exceed its revenues within a given fiscal year.

National Debt

The total amount of money that a country's government has borrowed, by various means, to fund its activities beyond its revenues.

Budget Act

A legislative act that governs budgetary allocations and the process of budget creation and approval by a government.