Estimating a warranty expense in the same period as the sales revenue is recognized is an example of:
A)the recognition criteria for revenues.
B)the matching objective.
C)the full-disclosure principle.
D)conservatism.

Question

Quizplus · Accepted Answer

The matching objective in accounting requires that expenses be matched with the revenues they help to generate in the same period. Estimating a warranty expense in the same period as the sales revenue is recognized ensures that the costs associated with generating that revenue are recorded at the same time, adhering to the matching principle.

Estimating a Warranty Expense in the Same Period as the Sales