Question :
11) Warranty expense debited in the period that:
A) the product : 1212480
11) Warranty expense is debited in the period that:
A) the product is repaired.
B) the product is sold.
C) the cash is collected from the customer.
D) either the product is sold or the cash is collected.
12) What entry is required when a business estimates warranty payable each period based on sales revenue?
A)
Estimated Warranty Payable
Warranty Expense
B)
Warranty Expense
Sales
C)
Warranty Expense
Estimated Warranty Payable
D)
Inventory
Estimated Warranty Payable
13) Estimating a warranty expense in the same period as the sales revenue is recognized is an example of:
A) the recognition criteria for revenues.
B) the matching objective.
C) the full-disclosure principle.
D) conservatism.
14) Bachman Merchandising has ten employees who each earn $180 per day. If they accumulate vacation time at the rate of 1.5 vacation days for each month worked, the amount of vacation benefits that should be accrued at the end of the month is:
A) $1,800.
B) $180.
C) $270.
D) $2,700.
15) All of the following are estimated liabilities except:
A) corporate income tax payable.
B) vacation pay payable.
C) employee income tax payable.
D) warranty payable.
16) Warranty expense is debited:
A) in the period the product under warranty is repaired or replaced.
B) in the period the revenue from selling the product was earned.
C) the timing will depend on the length of the warranty period.
D) in the period when the payment for the sale is received.
17) Sales revenue for Booker Company for 2014 amounted to $800,000. The products sold carry a six-month warranty. Management estimates the cost of the warranty to be 3% of sales revenue. Booker should:
A) debit Warranty Expense in 2014 for $24,000.
B) debit Estimated Warranty Payable in 2014 for $24,000.
C) debit Warranty Expense when the products are repaired or replaced in either 2014 or 2015.
D) credit Estimated Warranty Payable in either 2010 or 2011 when the products are repaired or replaced.
18) Accruing warranty expense is prescribed by the:
A) recognition criteria for revenues.
B) matching objective.
C) full-disclosure principle.
D) going-concern assumption.
19) Vacation pay expense should be debited:
A) when the employee takes vacation.
B) when the employee has performed a service to the company and earned the vacation.
C) is never debited.
D) when the employee returns from vacation.
20) BCB Corporation has made 11 monthly payments for its estimated annual income tax totalling $160,000. At year end, income tax expense for BCB Corporation amounts to $185,000. The adjusting entry will involve a:
A) debit to Income Tax Payable for $25,000.
B) debit to Income Tax Expense for $185,000.
C) debit to Income Tax Expense for $25,000.
D) credit to Income Tax Payable for $185,000.
