Question

On December 31, 2019, Accrued Warranty Payable is reported on the balance sheet for White and Decker Company The liability pertains to products sold, in 2019, with five-year warranties. The Accrued Warranty Payable should be reported on the balance sheet at December 31, 2019 as a
A. long-term liability only.
B. current liability only.
C. current liability and a long-term liability,
D. part of stockholders' equity.

Answer 1

Answer:

C. current liability and a long-term liability.

Explanation:

A current liability is described as a particular company's or an organization's  "short-term" financial obligations that are generally due within a basic or normal and one-year operating cycle. It is considered as typically settled by using "current assets" that can be used within a single year.

A long-term liability is described as an obligation that results from a former event and is not considered as due within a single year of the given date of a particular balance sheet. It is also referred to as "non-current liability".

As per the question, option C is correct.