The accounting principle requiring that a company record the warranty expense in the same period that it records sales revenue is the:
A) going concern principle.
B) matching principle.
C) conservatism principle.
D) consistency principle.

Question

Quizplus · Accepted Answer

The matching principle requires that expenses should be recognized in the same period as the corresponding revenue is recognized. Since warranty expense is directly related to sales revenue, it should be recognized in the same period as the sales revenue is recorded. This ensures that the financial statements reflect the true profitability of the company during a given period.

The Accounting Principle Requiring That a Company Record the Warranty