Identify the accounting concepts involved

Reference no: EM131893119

Problem

Karen Jones run a business that supllies machines parts. The buiness guarantees to replace items that become faulty withing one year from the date of sale. Each year there are several claims as a result of the guarantee. However, the chance that any one item will need to be replaced is remote.

Required:

Identify the accounting concepts involved

Explain how karen should account for the potential liabilty and how this will affect her finnal accounts.

Reference no: EM131893119

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