Profit smoothing involves shifting revenues and expenses between periods to reduce fluctuations in earnings.

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Profit smoothing is a legitimate accounting practice where a company can shift revenues and expenses between periods to reduce fluctuations in earnings. It is done to make earnings appear more stable and predictable to investors and analysts. However, it can also be used as a way to manipulate financial statements and mislead stakeholders, which is a fraudulent practice.

Profit Smoothing Involves Shifting Revenues and Expenses Between Periods to Reduce