15. accounting library The accounting library, as we have stressed, is well defended. Revenue recognition is an
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15. accounting library The accounting library, as we have stressed, is well defended. Revenue recognition is an important policy instrument in this regard.We delay recognition of revenue, and hence income, until the earnings cycle is largely complete. That said, suppose the manager has private information about the firm’s customer base. The accounting library would not admit this information on a timely basis, preferring instead to honor the revenue recognition rule. Explain this, especially given the theme in the chapter of underutilizing private communication as the implicit price for ensuring its integrity.
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