A Friend of Yours Recommends a Stock Based Upon a "Hot

question 57

Multiple Choice

A friend of yours recommends a stock based upon a "hot tip." You purchase it, and it subsequently declines the following year. Your friend advises you to purchase more at the lower price, despite clear evidence that this is not a sound company. Which of the following cognitive biases is being displayed by your friend?

• A) projection
• B) cognitive dissonance
• C) escalation of commitment
• D) frequency

Comprehend the accounting for capital leases, including the recording of lease acquisition and installment payments.

Grasp the concepts of non-interest-bearing notes and the accrual of interest expense over time.

Understand the calculation and recording of equal annual payments on notes payable that include principal and interest.

Recognize the need for and preparation of adjusting entries for accrued expenses, prepaid expenses, and contingencies.