Which of the following reflects the effect of the year-end adjusting entry to record estimated warranty expense?

A)Option A
B)Option B
C)Option C
D)Option D

Question

Which of the following reflects the effect of the year-end adjusting entry to record estimated warranty expense?

A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The adjusting entry increases liabilities (warranties payable)and decreases stockholders' equity (retained earnings).It increases expenses (warranty expense),which decreases net income.It does not affect the statement of cash flows.

Which of the Following Reflects the Effect of the Year-End