A firm is required to estimate a liability for repairs for products sold with a warranty. If the firm's accountants later find that the estimated amount for repairs has been overstated, the correct accounting procedure is to
a. make an adjusting entry to reduce the amount of estimate.
b. make a correcting entry because the overstatement is an error.
c. show the amount of overstatement on the income statement as a loss.
d. do nothing for the year in question and modify the next year's estimate.
d
Business
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Revenue from selling assets other than inventory is generally recognized:
A. at the date of sale. B. at the completion of production. C. after costs are recovered. D. as cash is collected.
Business
A party that is a merchant in one transaction is a merchant for all transactions in which he/she is
involved. Indicate whether the statement is true or false
Business