In which of the following periods should the expense for warranty costs be recorded?
A)The period when the product is repaired or replaced
B)The period when cash is paid to repair or replace the product
C)The period when the product is sold
D)The period when cash is collected for the sale of the product

Question

Quizplus · Accepted Answer

The expense for warranty costs should be recorded in the period when the product is sold. This is the period when the sales revenue is recognized, and the expense for the warranty cost should be recognized as a matching expense to this revenue.

In Which of the Following Periods Should the Expense for Warranty