Deferring the recognition of revenue for which the earnings process is complete is an example of
A) "big bath" accounting.
B) a "cookie jar" reserve.
C) a change in an accounting estimate.
D) strategic matching.

Question

Quizplus · Accepted Answer

A "cookie jar" reserve refers to the practice of deferring the recognition of revenue or overstating reserves in good years to smooth out earnings in leaner years. This practice can be used to manage earnings by saving some profits for future periods when the company's performance might be lower.

Deferring the Recognition of Revenue for Which the Earnings Process