You just purchased a new cell phone, which comes with a manufacturer's warranty of one year. The company that manufactures the cell phone would record the warranty as a(n):
A)accrued liability.
B)estimated liability.
C)known liability.
D)contingent liability.

Question

Quizplus · Accepted Answer

Estimated liability is the correct answer because the company must estimate the cost of future warranty claims related to the phones sold within the warranty period. This is not a precise amount at the time of sale but is based on historical data and estimates of future repairs or replacements.

You Just Purchased a New Cell Phone, Which Comes with a Manufacturer's