Product warranties are an expense of the period in which the product is sold.

Question

Quizplus · Accepted Answer

Product warranties are considered an expense of the period in which the product is sold because they are recognized at the time of sale as a way of accounting for the expected cost of future warranty claims related to the product. This is in accordance with the matching principle of accounting, which requires that expenses be recognized in the same period as the related revenue.

Product Warranties Are an Expense of the Period in Which