Repair costs incurred in honoring warranty contracts should be debited to Estimated Warranty Liability.

Name: Repair costs incurred in honoring warranty contracts should be debited to Estimated Warranty Liability.
Brand: Quizplus
Rating: 4.9 (45 reviews)

Question

Quizplus · Accepted Answer

Repair costs incurred in honoring warranty contracts should be recorded as an expense and are debited to the Estimated Warranty Liability account. This account represents the estimated amount the company expects to pay out in warranty claims, and as claims are paid, the liability is reduced.

Repair Costs Incurred in Honoring Warranty Contracts Should Be Debited