"Cookie jar reserves" are required under GAAP.

Question

Quizplus · Accepted Answer

"Cookie jar reserves" are not required under GAAP. In fact, they are not recognized under GAAP as a legitimate accounting practice. "Cookie jar reserves" refers to a practice where a company intentionally understates its income in one period and creates a "reserve" that it can draw from in a future period when it wants to boost its reported income. This practice is considered fraudulent and violates GAAP principles of accuracy and transparency in financial reporting.

"Cookie Jar Reserves" Are Required Under GAAP