Stringent rules do not exist for determining when revenue has been earned and is realizable thus leaving some flexibility for management to "manage earnings" within the confines of generally accepted accounting principles.

Question

Quizplus · Accepted Answer

While there are general principles and guidelines for when revenue can be recognized and considered realizable, there is still some room for interpretation and judgment by management. This flexibility can allow for certain accounting practices to potentially "manage earnings" within the framework of GAAP.

Stringent Rules Do Not Exist for Determining When Revenue Has