Question

What might a manager do during the last quarter of a fiscal year if she wanted to decrease current annual net income?

a.Delay shipments and sales to customers until after the end of the fiscal year.

b. Relax credit policies for customers.

c. Pay suppliers all amounts owed.

d. Delay purchases from suppliers until after the end of the fiscal year.

Answer 1

Here the manager want to decrease current annual net income, the net income increases when the credit items are increased here credit items means sales, interest income or other incomes.

Relaxing credit policies of Customer will have no impayon net income as customer balance is the amount receivable both are now the balance sheet items have no impact on the net income.

Further paying supplier all amount dues also have no effect on income statement as payment of cash and the supplier are both being a. Balance sheet item have no effect on net income.

Further the option delay purchase from supplier will not reduce the net income but will increase it as showing less expenses.

Here the option of delay shipment and sales to customer is the option which will decrease the current annual income as the sales if increased then profit also increased so to reduce the income sales need to be avoided.

Thus the correct Option is----------A i.e .Delay shipments and sales to customers until after the end of the fiscal year.