Indicate Whether Each of the Following Statements Is True or False

Indicate whether each of the following statements is true or false.
_____ a) The amount of warranty expense is an estimate that is based on the amount of merchandise sold.
_____ b) A warranty obligation only occurs if a buyer purchases an extended warranty.
_____ c) When a warranty claim is made, the seller's equity decreases.
_____ d) When a warranty claim is settled, the seller's liabilities decrease.
_____ e) Product warranties usually represent legal liabilities that must be reported in the financial statements.