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in this video were going to talk about how to accrue warranty expense in the financial statements so first of all its a good idea to have an understanding what warranty means and basically were talking about some kind of guarantee that a firm is making when you buy the product that there wont be any problems it wont break or if it does theyll actually replace the components that broke or the replace your computer whatever it is that you purchase so its some kind of guarantee about the workmanship so a firm here as you might see if they have a warranty they might have some kind of liability associated with that right because remember a liability is basically an obligation to sacrifice some assets at some point in time so when we have a warranty and we say ok you bought this computer but if it breaks it will replace it well give you another computer well we know theres some kind of obligation here so we have to determine well how do we account for this how do we put this in the
