Our Tendency to Judge the Likelihood of an Event on the Basis

question 27

Multiple Choice

Our tendency to judge the likelihood of an event on the basis of how readily we can remember instances of its occurrence is called the

• A)confirmation bias.
• B)representativeness heuristic.
• C)availability heuristic.
• D)belief perseverance phenomenon.

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Definitions:

Recognition

The process of recording an item or event in financial statements once it meets the criteria for financial reporting as defined by accounting standards.

Matching Principle

An accounting principle that requires companies to report expenses at the same time as the revenues they are related to are earned.

Matching Expenses

An accounting principle that matches expenses with the revenues they generate within the same accounting period.

Revenue Recognition Principle

An accounting principle that dictates how and when revenue is accounted for and reported, emphasizing that income is recognized when earned, regardless of when cash is received.