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:

Segregate Market

The practice of dividing or separating markets into sections or categories based on consumer demographics, behaviors, or other characteristics.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, with elasticity referring to the degree of responsiveness.

Good Substitutes

Products or services that can be used in place of each other, having a high cross-elasticity of demand.

Income Elasticity Coefficient

A measure indicating how much the quantity demanded of a good responds to change in consumer income.