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In this tutorial session, we will be discussing guarantee and warranty costs. A warranty is a promise made by a seller to a buyer to make the buyer whole in case of any issues with the product. It provides assurance to the buyer that the item will work as expected. Guarantee and warranty costs are important as they need to be recorded separately to follow the matching principle. This principle ensures that expenses are recorded in the same period as the related revenue. This helps in accurately reflecting the true cost of sales.