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Estimated Liabilities for Warranties (Accounting) - Explained

What are Estimated Liabilities for Warranties?

Written by Jason Gordon

Updated at April 7th, 2022

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Table of Contents

What are Estimated Liabilities for Warranties?How to Account for Warranties as Estimated Liabilities?

What are Estimated Liabilities for Warranties?

Warranties are a promise to repair, replace, or refund for products that do not perform as required or obligated. Businesses must set aside funds to cover these expenses. The amount is unknown, so it's estimated. 

The matching principle applies. The seller reports the estimated warranty expense during the period in which the product is sold. You match the expense with the revenue generated. 


Back to: Accounting & Taxation

How to Account for Warranties as Estimated Liabilities?

The below video explains how to account for the estimated expense for warranties. 


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  • What are Current Liabilities? – Financial Accounting
  • How to Record Accounts Payable (Liability Accounts)? – Financial Accounting
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  • What are Notes Payable? – Financial Accounting
  • What are Employee Payroll Liabilities? – Financial Accounting
  • Estimated Liabilities (Warranties) – Financial Accounting
  • What are Contingent Liabilities? – Financial Accounting
warranty expense estimated liabilities expense for warranty

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