Author Question: A special form on which is recorded pertinent data about a liability and the particulars of its ... (Read 167 times)

j.rubin · **on:** Jul 5, 2018

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n)
a. invoice
b. voucher
c. debit memo
d. remittance advice

Question 2

How should companies estimate and report warranty expense?

What will be an ideal response?

rnehls · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

b

Answer to Question 2

For financial statement purposes, businesses should recognize warranty expense at the time of sale. The matching principle requires that revenues and expenses that go together should be on the same income statement. Even though a company does not know whether a product or service will require warranty work, the cost to honor a warranty must be estimated in advance. Usually, the amount of the estimate of future warranty work is based on past experience or a set percentage of sales. At the time of the sale, or at the end of the month during the adjustment process, a business will record warranty expense and match the expense with an estimated warranty liability account.