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Recording revenues early can inflate current-period income, presenting a misleadingly strong financial performance that may not reflect actual sales activity. Conversely, delaying revenue recognition can lead to an understatement of income, which may negatively impact perceptions of a company's financial health. Both practices can distort the true financial position of a business and violate accounting principles, potentially leading to regulatory scrutiny and loss of stakeholder trust. Accurate revenue recognition is essential for reliable financial reporting.

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8h ago

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