Final answer:
In reporting financial statement income, businesses have incentives to select accounting methods that accelerate revenue and defer expenses. Businesses may choose accounting methods that accelerate revenues and defer expenses to show higher profits, attracting investors, and improving their financial outlook.
Step-by-step explanation:
In reporting financial statement income, businesses have incentives to select accounting methods that accelerate revenue and defer expenses. By accelerating revenue, businesses can show higher profits in the current period and attract investors or lenders. This can be achieved through recognizing revenue before it is actually received, for example, by using the accrual accounting method.
On the other hand, businesses may choose to defer expenses, such as depreciation expenses or repairs and maintenance costs, in order to minimize current expenses and maximize reported profits.