In concept the estimating of Warranty Expense when products are sold under warranty is similar to the estimating of Bad Debt Expense based on credit sales.

Question

Quizplus · Accepted Answer

Both Warranty Expense and Bad Debt Expense involve estimating a potential expense based on sales transactions. Warranty Expense estimates the expense that may be incurred for repairs or replacements of products under warranty, while Bad Debt Expense estimates the expense that may be incurred for non-payment of credit sales.

In Concept the Estimating of Warranty Expense When Products Are