Concerning Accounting for Warranties, Which of the Following Statements Is

Multiple Choice

Concerning accounting for warranties, which of the following statements is false?

A) The GAAP approach of accruing warranty expense and the related liability) in the year of the sale is not an acceptable method for federal income tax purposes.
B) The modified cash basis is the most conceptually sound method for financial reporting.
C) In accounting for service-type warranties, companies much report warranty expense in the period of sale.
D) The modified cash basis recognizes warranty expense when cash is paid for the repairs to merchandise under warranty.