Expense for a quality-assurance warranty is recorded along with the related liability in the reporting period in which the product under warranty is sold.

Question

Quizplus · Accepted Answer

This statement is true. The expense for a quality-assurance warranty is recognized in the same period in which the related product is sold and the liability for the warranty is also recorded at the same time. This is in accordance with the matching principle of accounting, which requires that expenses be recognized in the same period as the revenues they generate.

Expense for a Quality-Assurance Warranty Is Recorded Along with the Related