If a company pays cash to settle a customer's warranty claim, what is the effect on the accounting equation?
What will be an ideal response?
Assets (cash) are decreased and liabilities (warranties payable) are decreased.
The cash payment for the repair is not an expense. Warranty expense was recognized in the period in which the sale was made (when the Warranties Payable account was credited). The payment decreases assets (cash) and liabilities (warranties payable). The income statement is not affected by the repairs payment.
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If you park your car in a parking lot, keep the keys, and can drive the car out yourself whenever you wish, a bailment has not been created.
Answer the following statement true (T) or false (F)
Clothes, furniture, and major appliances such as refrigerators and dishwashers are examples of ________ goods.
A. capital B. unsought C. shopping D. convenience E. specialty
London Limited estimated that its productivity in the year 2013 was 180 packages of cookies per labor hour. In 2014, London estimated its productivity as 145 packages of cookies per labor hour. What is London’s productivity growth rate from 2013 to 2014?
a. -19.4% b. 35% c. -35% d. 19.4%
Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:
A. Uncontrollable expenses. B. Indirect expenses. C. Controllable expenses. D. Direct expenses. E. Fixed expenses.