X Company began selling appliances this year.The company president has decided not to record any warranty expense or estimated warranty liability because the company's products are so good that he does not expect to have to make any warranty repairs.This accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

The accounting choice of not recording any warranty expense or estimated warranty liability is considered aggressive because it assumes that no warranty repairs will be necessary, which may not be probable in reality. This approach can lead to an overstatement of income and assets, and potentially mislead users of the financial statements.

X Company Began Selling Appliances This Year