A Source of Cognitive Bias Resulting from the Tendency to Overestimate

question 14

Multiple Choice

A source of cognitive bias resulting from the tendency to overestimate one's own ability to control activities and events is known as:

• A)systematic errors
• B)representative bias
• C)escalating commitment
• D)illusion of control and overconfidence bias
• E)fundamental attribution error

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Definitions:

Net Income

The amount of money left after all expenses, taxes, and costs have been subtracted from a company's total revenue.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Phantom Profits

Profits recorded in the accounting books but not actually realized through cash transactions, potentially leading to a misleading financial condition.

FIFO Costing Assumption

A method used in accounting that assumes the first items of inventory purchased are the first ones sold.