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This session is about guarantee and warranty costs, discussing what warranty is and the importance of treating it separately. A warranty is a promise made by a seller to a buyer to make the buyer good in case of deficiency in a product. It provides assurance to the buyer that the item will work as expected. Guarantee and warranty costs are treated separately to align with the matching principle, which ensures expenses are matched with revenues in the same period. This is important for financial reporting accuracy.
