The Accounting Issue(s) in the Crazy Eddie Case Were

question 16

Multiple Choice

The accounting issue(s) in the Crazy Eddie case were:

• A) Accelerating revenues into earlier periods
• B) Inflating inventory and net income
• C) Capitalizing costs that should have been expensed
• D) Off-balance sheet entities

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Definitions:

Availability Heuristic

An intellectual quick-step that employs readily recalled instances when contemplating a certain topic, notion, strategy, or judgment.

Endowment Effect

The phenomenon in which individuals value an owned object higher than its market value simply because they own it.

Prospect Theory

Prospect Theory is a behavioral economic theory that describes how people choose between probabilistic alternatives involving risk, where the probabilities of outcomes are known.

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are unknown.