True or False. As it is not possible to accurately calculate the cost of warranty on...
True or False. As it is not possible to accurately calculate the cost of warranty on a product no provision can be made in the current liabilities.
please explain
Homework Answers
Answer
- The answer is FALSE.
- It is indeed possible to make a provision in the current liabilities for the cost of warranty even though it is not possible to accurately calculate the cost.
- Such provision for warranty expenses can be made based on
estimates.
These estimates are to be tested and studied and should be based on past trends.
Companies make warranty provisions based on such estimates only.
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True or False. As it is not possible to accurately calculate the
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Question 2 (1 point) Warranty liabilities are estimated based on actual warranty costs incurred to date True False Question 3 (1 point) Sales taxes which are combined in the sales price are required to have a journal entry recording the tax separately from the sale. True False Question 4 (1 point) The accounting for warranty costs is based on the concept of matching expenses with revenues, which requires that the estimated cost of honouring warranty contracts should be recognized as...
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