Which of the following is true of an express warranty?

a. It gives the impression of environmental friendliness to a product.
b. It contains an unwritten guarantee about the performance of a product.
c. It prohibits other firms from using a brand or part of a brand without permission.
d. It ranges from simple statements to extensive documents written in technical language.

ANSWER: d

An express warranty is a written guarantee. It ranges from simple statementsâ€"such as "100-percent cotton" and "complete satisfaction guaranteed"â€"to extensive documents written in technical language.

Business

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A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an actual liability. If this was not reported in the notes to the financial statements, what is the effect on the financial reporting of the company?

A) There would be no effect. B) The liabilities on the balance sheet would be understated. C) The information about the transaction would be inadequately disclosed in the notes. D) The net income of the company would be understated.

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