Reconstruct Warranty Kostenlos

in this module we're going to be discussing the concepts of warranty expense and warranty liability so a warranty is generally a situation where a company offers a guarantee that their product that they're selling you will work for a specified period of time sometimes you'll see this referred to as number of years number of months for vehicles it's sometimes number of miles but again they guarantee that the product will work defect free or with certain limitations for a specific period of time if the product does not work as intended they will do generally one of three things they'll either give you a cash settlement of some sort they may just replace the product altogether which is fairly common or they may fix the product regardless of what parts what labor it takes they'll take care of that for you now in some cases as in the case with a vehicle when you go in for a warranty claim generally you're going to have some sort of deductible not all the time but in some cases you will and earlier I mentioned the limitations that they have so it may not be a full unlimited warranty especially with larger things like vehicles but for a VCR a DVD player or a you know a video game console these are tending to be Unlimited so if you think about this situation if you have two identical companies that have the same basic product and they offer the same service they serve the same customer base and one of them offers a warranty and the other one doesn't customers are going to tend to go to the company with a warranty because they can trust the product the company is standing behind their product now what's going to happen there is either they're going to be able to uh sell this product at a higher price price or if they have the same price they're just going to have a higher s sales volume more people will come to the the company with the warranty so you're going to have an impact on revenue is what we're trying to say here you're going to have increased revenues generally over the company that does not offer a warranty now the reason you're going to have the increased revenue is the warranty itself now that comes with a downfall as well that you're going to have increased expense unless your product is perfect and yes you offer a warranty but you never have any issues with the product in that situation you wouldn't have any expense but in reality you're going to have expense related to the warranty claims that will eventually come through now the problem here is that we're not going to know about these expenses until you know if we have a two-year warranty we may not know about these expenses until two years later if we waited to record the expense when we knew what the claim was because we would be violating the matching principle of accounting matching principle requires that anytime we have an expense that directly relates to a revenue we want to record it in the same period now the same situation was discussed in a bad debt expense module accounts...