The accounting for warranty costs is based on the
A) going concern principle.
B) expense recognition principle.
C) conservatism concept.
D) historical cost principle.

Question

Quizplus · Accepted Answer

The expense recognition principle dictates that expenses should be recognized in the same period as the revenue they help generate. Warranty costs are recognized as expenses in the period in which the related revenue is recognized. For example, if a product is sold with a one-year warranty, the cost of that warranty is recognized as an expense in the same period as the revenue from the sale of the product is recognized.

The Accounting for Warranty Costs Is Based on the