The auditor for Universal Tools, Inc. discovered in 2017 that the warranty liability account showed a $25,000 debit balance. She reasoned that the correct treatment of this discovery is to ________
A) conduct a fraud investigation to see if a fraud has occurred
B) make engineering investigate to see if there is a production failure
C) wait until next year to see if the trend continues
D) investigate and increase the warranty expense and liability to an appropriate level
Answer: D
Business
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