Agilent Technologies Inc., a diversified technology company, sells extended warranties for the products and services provided to customers, deferring the revenue until future recognition. The following information about the extended warranty liability account was taken from Agilent's annual report (dollars in millions):

INSTRUCTIONS:
a. Draw a T-account for the extended warranty liability, record the activity disclosed above in that account, and explain how the entries represent an application of the matching principle. Note that extended warranties are different from assurance warranties. With an extended warranty, the accounting approach is the same followed for unearned revenues.
b. Explain how the cash flow for warranties is different from the profitability of warranties.

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2019 2018 Beginning balance $35 $34 Cash received 54 53 Revenue earned (57) (52) Ending balance $ 32 $ 35