Question: A decrease in warranty liabilities increases net sales. Is this correct?. which answer is right? A or B? A decrease in warranty liabilities increases net
"A decrease in warranty liabilities increases net sales. Is this correct?". which answer is right? A or B?

A decrease in warranty liabilities increases net sales. Is this correct? A) This is incorrect: a trick question. An increase in a warranty liability means more warranty expense to charge against sales but the expense is classified as part of selling expenses, not as a reduction to sales. B) This is correct. Holding all else constant, an increase in a warranty liability means more warranty expense to charge against sales (to yield lower net sales), and a decrease in a warranty liability has the opposite effect.
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