Generally Accepted Accounting Principles (GAAP) require companies to smooth earnings by shifting some profits from good years to bad years.

Question

Quizplus · Accepted Answer

GAAP does not allow companies to manipulate or smooth earnings by shifting profits between periods; it requires companies to record revenue and expenses in the period they are earned or incurred, ensuring accuracy and transparency in financial reporting.

Generally Accepted Accounting Principles (GAAP) Require Companies to Smooth Earnings