Are all warranty costs accounted for under the accrual basis of accounting? explain.

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10 December, 01:23

Are all warranty costs accounted for under the accrual basis of accounting? explain.

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Savannah Coffey · Answer 1

All warranty costs accounted for under the accrual basis of accounting go under this section unless the repair cost does not have reasonable estimation. If the repair cost does not have reasonable estimation, it goes under the cash basis for accounting. The accrual basis method of accounting is when you record transactions for revenue when earned and expenses as they are incurred.