Income smoothing is a financial strategy employed by companies to reduce fluctuations in reported earnings, thereby presenting a more stable financial performance over time. This practice involves the manipulation of accounting policies or estimates to level out profits and losses. While not inherently illegal, it can raise ethical concerns if it misleads stakeholders. What is income smoothing? It is a technique often scrutinized in financial reporting.
Get Your FREE Exam Secrets Cheat Sheet!
Plus a 3-Part CMA Video Course
82,000+ accounting and finance pros got their free CMA cheat sheet.
Get yours too, today!