Warranties should be accrued if it is
A)probable that an expense has been incurred and the amount is reasonably estimable.
B)possible that an expense has been incurred regardless of whether the amount is estimable or not.
C)possible that an expense will be incurred and the amount is reasonably estimable.
D)remote that any expense has been incurred.

Question

Quizplus · Accepted Answer

Warranties should be accrued if it is probable that an expense has been incurred and the amount is reasonably estimable. This means that there is a likelihood that a warranty claim will be made and the estimated cost of fulfilling that claim can be reasonably determined. If it is only possible that an expense will be incurred or the amount is not reasonably estimable, then an accrual may not be necessary. However, if it is remote that any expense has been incurred, then no accrual should be made.

Warranties Should Be Accrued If It Is