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Asked by Sierra Schick on May 18, 2024

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Which of the following loss contingencies is not usually accrued?

A) product warranty obligations
B) premium offer obligations
C) risk of loss from fire
D) noncollectibility of receivables

Warranty Obligations

Warranty obligations are promises made by a seller to a buyer to repair, replace, or rectify defects in goods sold within a certain period after the sale.

Premium Offer

A premium offer is a marketing strategy where additional value is added to the regular product or service offering to encourage purchase or enhance customer satisfaction.

Noncollectibility Receivables

Accounts receivable that are considered unlikely to be collected and might be written off as bad debts.

  • Specify and differentiate between diverse contingencies and the method of their treatment in fiscal statements.
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AS
Aaron SolomonMay 20, 2024
Final Answer :
C
Explanation :
Loss contingencies that are not probable or the amount cannot be reasonably estimated are not accrued. Risk of loss from fire falls under this category, as it is an uncertain event that may or may not occur, and the amount of loss cannot be reasonably estimated in advance. Product warranty obligations and noncollectibility of receivables are usually accrued if probable and can be reasonably estimated. Premium offer obligations are not usual loss contingencies.

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