The Fallacy of Composition Refers to the False Assumption

question 60

Multiple Choice

The fallacy of composition refers to the false assumption:

• A) that if A happens before B, then A caused B.
• B) that what is true for a part will also be true for the whole.
• C) that what is true for the whole must also be true for a part.
• D) of all other things held constant.

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Definitions:

Income Statement

A financial document that shows a company's revenues, expenses, and net income over a specific period of time.

Revenue Expenditures

Payments made for ordinary maintenance of an asset or unnecessary or unreasonable situations.

Plant Assets

Long-term tangible assets used in the production of goods or services.

Capital Expenditures

Original cost of an asset as well as additions or enlargements, extraordinary repairs, and betterments.