Question

IncorrectQuestion 3

0 / 1 pts

Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

Use by customers to determine a company's ability to provide needed goods and services.

Use by labor unions to examine earnings closely as a basis for salary discussions.

  

Use by government agencies to formulate tax and economic policy.

   

Use by investors interested in the financial position of the entity.

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

  

Increase research and development activities.

   

Relax credit policies for customers.

   

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

   

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

Answer 1

1:Option 3: Use by government agencies to formulate tax and economic policy.

The income statement is a summary of the incomes and expenses of the firm for a particular period. The customers can determine if the company can provide the goods and services by analyzing the profitability of the business .The labor unions can use the income statement to determine the incomes and revenues of the business. Investors can base their decisions on the profitability of the business by examining the income statement.

However the government will not use an individual income statement in order to determine tax and economic policies since these policies are established at a macro level and an individual statement when not be beneficial for the economy as a whole

2: Option 2: Relax credit policies for customers.

Increasing the research and development activities will increase the expenses and reduce the net income. Delaying shipments to customers will also not impact the income and expenses. Delaying purchases may have no impact on income and expenses. However relaxing the credit policies to the customers will increase the revenues which will in turn increases the current income of the business in the last quarter.