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) The company is forcefully contesting a personal injury suit and a loss is possible and reasonably estimable.
C) An accommodation endorsement involving a remote loss.
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, meeting the criteria for accrual under accounting standards.

Which of the Following Contingencies Should Be Accrued in the Accounts