A company gives a two-year warranty for its product.The estimated liability for product warranties is a current liability.

Question

Quizplus · Accepted Answer

This statement is true. The estimated liability for product warranties is considered a current liability because it represents the company's obligation to repair or replace products that may fail within the warranty period, and this obligation is expected to be fulfilled within the next year or operating cycle, whichever is longer.

A Company Gives a Two-Year Warranty for Its Product