accounting library The accounting library, we have stressed, is weil defended; its integrity is important. In the larger picture, revenue recognition is an important policy instrument.

We delay recognition of revenue, and hence income, until the earnings cyele is largely complete.

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.

AppendixLO1