The manager preparing the financial statements is trying to reduce net income to keep income taxes as low as possible.Which of the following accounting decisions could he use to decrease income?
A)Not recognize revenue until all the cash is collected.
B)Pick a longer life for the depreciation of fixed assets.
C)Pay out the maximum amount of dividends possible.
D)Delay the payment of expenses as long as possible.

Question

Quizplus · Accepted Answer

By not recognizing revenue until all the cash is collected, the manager can delay the recognition of income for tax purposes. The other options do not necessarily decrease income, but rather manipulate other financial metrics such as asset values or cash flows.

The Manager Preparing the Financial Statements Is Trying to Reduce