- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 5. Expense Recognition
CFA Practice Question
Warranty is recorded as ______.
B. an actual expense on the income statement when repairs are made
C. an estimated expense on the income statement when the sale is made
A. a prepaid expense when the sale is made
B. an actual expense on the income statement when repairs are made
C. an estimated expense on the income statement when the sale is made
Correct Answer: C
A liability is probable and should be recognized and expensed during the period of sales if it can be reasonably estimated.
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