Answered: The adjustment will increase the…

The adjustment will increase the warranty expense, if the actual cost of warranty exceeds the estimated warranty liability True False

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 10MC: What accounts are used to record a contingent warranty liability that is probable and estimable but...

See similar textbooks

Related questions

Q: If the proceeds of a discounted note are less than the face amount, the difference is debited to…

Q: Warranty expenses result when a company sells products then estimates the units and cost per unit…

A: Estimation of future liability on the selling product is known as estimated warranty liability.…

Q: Why are warranty liabilities usually recognized on the balance sheet as liabilities even when they…

A: A warranty liability is a liability account that reports the estimated amount that a company will…

Q: If a note receivable is discounted without recourse a. the contingent liability may be disclosed…

A: Note Receivable: It is the asset which represent the value of all promissory notes , that is a…

Q: Which of the following provides the best explanation for why warranty expense should be estimated…

A: Goods that are sold in a year can presented for warranty repair in upcoming years. But this warranty…

Q: f a problem is silent to the terms of a note payable, is it considered as a long-term or a…

Q: If a note receivable is discounted with recourse, which is false? a. a contingent liability exists…

A: b. note receivable discounted will be credited EXPLAINATION: Discounting means selling or pledging…

Q: Which one of the following options is correct for a journal entry creating provision for warranty…

A: SOLUTION- THE COMPANY NEEDS TO MAKE PROVISION OF WARRANTY WHEN IT SELLS THE PRODUCT WITH THE…

Q: What is a key difference between a short-term note payable and a current portion of a noncurrent…

A: Short term note payable is a debt which is required to be paid within a period of less than one…

Q: 9. Which of the following best describes the accounting for assurance-type warranty costs? * a.…

A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…

Q: The conversion of the company’s short-term debt into a long-term note payable would decrease both…

A: Note: Since you have asked multiple question, we will solve the first question for you. If you want…

Q: The amortization of premium on notes receivable is a. deduction from accrued interest receivable b.…

A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.

Q: 1. The discounting of note receivable is accounted for as a secured borrowing. 2. The discounting of…

A: Note receivables: Note receivables can be defined as the written promise made by the borrower to…

Q: An installment note is a liability requiring a series of payments to the lender. True or False True…

A: Introduction: An instalment note is a legal obligation or liability that requires the lender to…

Q: The discount allowed to a debtor for early payment is

A: Debtors :- Debtors are the person to whom goods and services are sold on credit.

Q: If a problem is silent as to whether a warranty payable is short-term or long-term, will it be…

A: Warranty payable represents a liability account that reports the estimated amount that a company…

Q: If the provision for doubtful debt is increased, the accounting adjustment will be: Select one: a.…

A: The question is multiple choice question. Required Choose the Correct Option.

Q: Distinguish between the accounting treatment of a manufacturer’s warranty and an extended warranty.…

A: WarrantyWarranty is assurance provided to a customer by a seller. It is provided against the…

Q: discounted note will produce an effective rate which is different than the stated rate. Why does…

A: a discounted note is a short term financial products which allows the company two raise the cash…

Q: A discounted note receivable is an example of a loss contingency? Is it true or false

A: This is a False.

Q: hich of the following best describes the accounting for assurance-type warranty costs?

A: Since an assurance-type warranty guarantees the functionality of a product, the warranty is not…

Q: When a note payable is issued for property, goods, or services, the present value of the note maybe…

A: The note payable is issued to creditors which is to be paid off at the maturity date.

Q: A decrease in the allowance for doubtful debts would result in O a reduction in gross profit an…

A: Following is the answer to given question

Q: If problem is silent as to the terms of a Warranty Payable, will it be presented in the current…

A: Warranty Payable:-It is a liability for the company which means the company has to pay for repair…

Q: e amount of warranty expense-

A: Warrant expense = Units of sales * Rate of repairs * Average cost of repairs per unit

Q: Can there be instances when the interest expense recognized for each period increases? No, such…

A: solution : Can there be instances when the interest expense recognized for each period increases?…

Q: True or false When a non-interest-bearing note has been issued at a discount or premium and is fully…

A: Non-interest bearing note are those liabilities of the entity which are to be repaid after certain…

Q: Depending on the frequency of compounding, how can the effective interestearned (or paid by the…

A: The basic difference between compounding and simple interest is that simple interest is only offered…

Q: Under what circumstances would an accrual

A: Interest on promissory notes: Interest on the promissory note is a return to the person lending the…

Q: Describe how the matching principle applies to contingent liabilities (hint: warranties).

A: Introduction:- Contingent liability may or may not occurred in the future. Matching principles…

Q: When the amount of rebate on bills discounted shown in the adjustments, then it has to be: a.…

A: When the amount of rebate on bills discounted shown in the adjustments, then it has to be Deducted…

Q: Warranty liability is an estimate based on past warranty claims. How might a company determine how…

A: Warranty Liability MEANING : A warranty is a guarantee that a company will replace or fix a…

Q: RUE OR FALSE? The effect of a lender agreeing to give the borrowing entity a grace period after the…

A: Current liabilities: Current liabilities are the obligations that are to be met within a year or 12…

Q: What is the gain on extinguishment of the note payable?

A: option b is the answer.

Q: All of the following statements related to recording warranty expense are true except: Top of Form…

A: As per the accrual basis warranty expenses should be recognized in the same period, in which revenue…

Q: Amount for warranty liabilities is estimated on the basis of: None of these Market valuation Market…

A: Accounting is essential to operating a company since it allows businesses to track income and…

Q: All of the following statements related to recording warranty expense are true except: Multiple…

A: As per the accrual basis warranty expenses should be recognized in the same period, in which revenue…

Q: The expense for warranty costs is recorded in the period ________

A: The Answer

Question

The adjustment will increase the warranty expense, if the actual cost of warranty exceeds the estimated warranty liability

True

False

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Auditing Accounting Estimates & Using the Work of Specialists

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Warranty liability is an estimate based on past warranty claims. How might a company determine how much to accrue for warranty? Why might it change the accrual?
2. Which of the following best describes the accounting for assurance-type warranty costs? * 1 point a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
Which of the following is an account used in applying the Sales Warranty Approach, but not the Expense Warranty Approach? Select one: O a Estimated liability under warranties Ob. Warranty Expense Oc Unearned Warranty Revenue O d. Prepaid Warranty Expense
19. Which of the following best describes the accounting for assurance-type warranty costs? * a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
An installment note is a liability requiring a series of payments to the lender. True or False True False
All of the following statements related to recording warranty expense are true except: Multiple Choice Warranty expense should be recorded in the period when the warranty service is performed. Warranty costs are probable and the amount can be estimated. The seller reports a warranty obligation as a liability. Estimated warranty expense is recorded when revenue from the sale of the product or service is reported. Recording estimated warranty expense requires a debit to Warranty Expense.
Identify the types of information that can readily be deter-mined from an amortization table for an installment loan. (More than one answer may be correct.)a. Interest expense on this liability for the current year. b. The present value of the future payments under chang-ing market conditions. c. The unpaid balance remaining after each payment.d. The portion of the unpaid balance that is a currentliability.
What accounts are used to record a contingent warranty liability that is probable and estimable but has yet to be fulfilled? A. warranty liability and cash B. warranty expense and cash C. warranty liability and warranty expense, cash D. warranty expense and warranty liability
15. The expense warranty accrual method a. violates the matching conceptb. requires recognition in the period of sale of the estimated warranty expense and warrantyliabilityc. separates accounting for two components of the sales price: the price of the product andthe price of the warrantyd. debits warranty costs to expense in the period when warranty expenditures are made
The amortization of premium on notes receivable isa. deduction from accrued interest receivableb. an addition to interest incomec. an addition to accrued interest receivabled. a deduction from interest income
Can there be instances when the interest expense recognized for each period increases? No, such scenario is not possible for a note payable. Yes, when the note requires periodic principal payments. Yes, when the note is with an unamortized discount. Yes, for both reasons from the other choices
7. TRUE or FALSE. In discounting of customer’s note under conditional sale, an account “Note Receivable-Discounted” is credited. This account is a liability which will be presented under the current portion.