The balance in the Warranty Liability account is always equal to Warranty Expense.

Question

Quizplus · Accepted Answer

The first statement is false, as the balance in the Warranty Liability account can be greater or lesser than Warranty Expense depending on the timing and amount of actual warranty expenditures. The second statement is true, as the Warranty Liability account is initially increased by warranty expense, but is subsequently reduced by actual warranty expenditures.

The Balance in the Warranty Liability Account Is Always Equal