Which of the following contingencies should be accrued in the accounts and reported in the financial statements?
A)The estimated expenses of a one-year product warranty.
B)An accommodation endorsement involving a remote loss.
C)The company is forcefully contesting a personal injury suit and a loss is possible and reasonably estimable.
D)It is probable that the company will receive $50,000 in settlement of a lawsuit.

Question

Quizplus · Accepted Answer

The estimated expenses of a one-year product warranty should be accrued because it is probable and can be reasonably estimated, which aligns with the accounting principles for recognizing liabilities.

Which of the Following Contingencies Should Be Accrued in the Accounts