Question

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

Answer 1

A manager may decrease current annual net income by delaying or postponing expenses, lowering prices, or increasing reserves or provisions.

Step-by-step explanation:

In order to decrease current annual net income, a manager may take several actions during the last quarter of a fiscal year:

1. Delaying or postponing expenses: The manager can defer certain expenses until the next fiscal year, which will reduce the current year's net income. For example, they may delay equipment purchases or maintenance costs.
2. Lowering prices: By offering discounts or running promotions, the manager can reduce revenue and subsequently decrease net income. This strategy is commonly used to increase sales volume but lower profitability in the short term.
3. Increasing reserves or provisions: The manager can set aside additional funds for future expenses, such as contingencies or warranty claims. By increasing these reserves, the current net income will be reduced.

These are just a few examples of actions a manager can take to decrease current annual net income during the last quarter of a fiscal year.