Warranty expense 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. Warranty expense is recognized and recorded in the same period in which the product under warranty is sold, and a corresponding liability is also recorded for potential warranty claims. This is done in accordance with the matching principle, which requires that expenses be matched with the revenues they help to generate.

Warranty Expense Is Recorded Along with the Related Liability in the Reporting