The Practice of Carefully Timing the Recognition of Revenues and Expenses

question 22

Multiple Choice

The practice of carefully timing the recognition of revenues and expenses to even out the amount of reported earnings from one year to the next is called

• A) revenue recognition.
• B) income smoothing.
• C) restructuring.
• D) accrual-basis accounting.

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Definitions:

Marginal Revenue

The extra revenue generated from the sale of an additional unit of a product or service.

Externalities

Financial repercussions impacting bystanders who are not directly involved, which can be beneficial or detrimental.

Efficient Level

Efficient Level refers to the optimal amount of production or activity that maximizes benefits or utility while minimizing costs or waste.

Impose a Tax

The act of a governing body levying a financial charge or other levy upon a taxpayer, which can affect individuals, entities, or transactions.