What type of accounts are:
I. Warranty expense; and
II. Provision for warranties

Question

Quizplus · Accepted Answer

Warranty expense is an expense account that represents the estimated cost of fulfilling warranty obligations to customers. Provision for warranties, on the other hand, is a liability account that represents the amount set aside by a company to cover future warranty claims. This provision is made to ensure that a company has enough funds to cover the cost of any future warranty obligations. Therefore, Warranty expense is an expense account while Provision for warranties is a liability account.

What Type of Accounts Are