Final answer:
The initial journal entry for recording quality assurance warranties recognizes 1) a contingency liability, not deferred revenue. This creates a warranty liability on the balance sheet, reflecting the company's future obligation.
Step-by-step explanation:
The initial journal entry used to record quality assurance warranties typically recognizes a contingency liability. When a company sells a product with a warranty, generally accepted accounting principles require that an estimate of future costs related to the warranty is recorded at the time of the sale. This estimation creates a liability because it represents an obligation that the company has to its customers for future warranty services. Hence, the correct answer to the question is 1) A contingency liability.
Deferring revenue is not directly related to the recording of warranty costs, as deferred revenue pertains to a payment received for goods or services not yet delivered or performed. Both deferred revenue and warranties are essential concepts in accounting but play different roles on the balance sheet. A journal entry recognizing a warranty obligation would debit a warranty expense account and credit a liability account, typically referred to as a warranty liability or warranty reserve.