If it fails to record estimated warranty costs,what will happen to the current ratio?

Question

Quizplus · Accepted Answer

When a company fails to record estimated warranty costs, its liabilities are understated, which means its current liabilities are lower than they should be. This results in the current ratio (current assets divided by current liabilities) being higher than it should be, or overstated, because the denominator (current liabilities) is too small.

If It Fails to Record Estimated Warranty Costs,what Will Happen