Which of the Following Assumptions Is Embodied in the AFN

question 16

Multiple Choice

Which of the following assumptions is embodied in the AFN equation?

• A) All balance sheet accounts are tied directly to sales.
• B) Accounts payable and accruals are tied directly to sales.
• C) Common stock and long-term debt are tied directly to sales.
• D) Fixed assets,but not current assets,are tied directly to sales.
• E) Last year's total assets were not optimal for last year's sales.

---

Definitions:

Actor-Observer Bias

This psychological bias describes a tendency to attribute one’s own actions to external factors, while attributing others’ actions to their character or disposition.

Self-Serving Bias

A common cognitive bias that causes individuals to attribute positive outcomes to their own characteristics and negative outcomes to external factors.

Fundamental Attribution Error

A cognitive bias that leads people to overemphasize personal traits and underestimate situational factors when explaining others' behaviors.

Self-Serving Bias

A cognitive bias that involves attributing successes to internal factors and failures to external factors to maintain self-esteem.