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Warranty expenses

Managing Warranty Costs in Accrual Accounting

February 26, 2024

How does accrual accounting handle warranty expenses?

Accrual accounting records warranty expenses when products are sold, matching them with the revenue earned. A provision for warranties is made, estimating future costs based on historical data. This helps in recognizing expenses in the period of sale, aligning costs with revenue for accurate financial reporting.

Tags : Accrual Accounting , Warranty Expenses , Financial Reporting

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