Indicate whether each of the following statements about product warranties is true or false.

1. Warranty Expense is recorded at the time a company provides service to a customer under the terms of the warranty

2. Providing service to a customer under a product warranty is a claims exchange transaction

3. Recording an obligation for a warranty does not affect the statement of cash flows

4. Generally, a company that offers warranties on its products must report a liability on the balance sheet

5. The entry to record warranty expense is an asset use transaction