The modified cash basis to determine warranty expense
A)violates the matching concept
B)requires recognition in the period of sale of the estimated warranty expense and warranty liability
C)separates accounting for two components of the sales price: the price of the product and the price of the warranty
D)records warranty expense when the merchandise under warranty is sold

Question

Quizplus · Accepted Answer

The modified cash basis violates the matching concept because it recognizes warranty expenses when they are incurred rather than matching them with the related sales revenue.

The Modified Cash Basis to Determine Warranty Expense