Because the sale of a service-type warranty increases sales revenue, the seller should recognize the expense of providing that warranty in the year of sale.

Name: Because the sale of a service-type warranty increases sales revenue, the seller should recognize the expense of providing that warranty in the year of sale.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The expense of providing a service-type warranty should be recognized over the period the warranty is in effect, not in the year of sale, as it is a future obligation.

Because the Sale of a Service-Type Warranty Increases Sales Revenue