An example of a judgment in accounting for product warranties is ________.
A) the items sold that are subject to warranty coverage
B) whether a product warranty should be for one year or two years
C) the cost of a specific replacement part
D) the amount of warranty expense to be accrued as a percent of sales

Question

Quizplus · Accepted Answer

The amount of warranty expense to be accrued as a percent of sales involves judgment because it requires estimating future costs based on past experience and other factors.

An Example of a Judgment in Accounting for Product Warranties