What is the accounting principle underlying the recognition of an estimated liability for warranties in the period of product sale?

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be matched with the revenues they help to generate. When a product is sold with a warranty, part of the revenue is considered earned for the warranty service, and the estimated cost of that warranty obligation is recognized as an expense in the same period to match with the revenue.

What Is the Accounting Principle Underlying the Recognition of an Estimated