Auditing the warranty liability most likely includes the evaluation of which of the following?
A)Changes in the cost of repairing certain products.
B)Production line employee turnover.
C)Reserve for bad debt as a percent of sales.
D)Supplies used in the production process.

Question

Quizplus · Accepted Answer

Auditing the warranty liability would involve evaluating changes in the cost of repairing certain products to accurately estimate the amount of warranty claims that may be made in the future. This is because the warranty liability is a calculated estimate of the future cost of servicing products sold with a warranty.

Options B, C, and D are not directly related to the warranty liability and are unlikely to be evaluated as part of this audit.

Auditing the Warranty Liability Most Likely Includes the Evaluation of Which