In which of the following periods should the expense for warranty costs be recorded?
A) The period when the product is sold
B) The period when the product is repaired or replaced
C) The period when cash is paid to repair or replace the product
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, as this is when the warranty obligation is created. The cost of providing the warranty should be recognized as an expense at the time of sale, with a corresponding liability recorded for the estimated cost of future warranty claims.

In Which of the Following Periods Should the Expense for Warranty