Revenue and Expense Recognition
Instructions
The pros and cons of allowing flexibility in GAAPThe pros and cons of management using this flexibility to manage earnings.Include an example of a company whose management engaged in earnings management and the consequences of management's actions.Substantial: Messages should relate to the subject matter and provide information, opinions or questions about that subject matter. A substantive paper will be a minimum of 300 words and supported by a minimum of two outside, scholarly sources.
Answer
The advantages and disadvantages of allowing flexibility in GAAP Whether or not to achieve consistency following GAAP, fee guidelines, or any of these, directors will have flexibility in management responsibilities and revenue. The current GAAP is more flexible than tax codes, and a certain level of financial to bookkeeping flexibility is often seen as a positive component. There are many financial information users, and GAAP's flexibility allows companies to choose book-keeping remedies that can best describe the information and limit contract costs (Thielemann, Felix, and Tami 196). However, given the GAAP flexibility, the assessment company's assessment of detailed income will give the organization broad vigilance to limit the burden or expand the disclosure of revenue related to critic...
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