Managers Sometimes Make Poor Decisions Because of Cognitive Biases in Their

question 75

Essay

Managers sometimes make poor decisions because of cognitive biases in their decision-making process.Discuss four of the sources of bias that can adversely affect the ability of managers to make a good decision,and illustrate each of them with a realistic business decision-making situation.

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Definitions:

End-of-period Spreadsheet

A financial document used to summarize account balances and adjustments at the conclusion of an accounting period before preparing financial statements.

Closing Entries

Entries recorded at the conclusion of a fiscal period to move balances from temporary accounts to permanent ones, thus readying the accounts for the upcoming period.

Closing Entries

Entries in the journal made during the closing of an accounting period to move balances from transitory accounts to enduring accounts.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, different from the calendar year.