The Beginning Inventory of This Year Is Understated

question 67

Multiple Choice

The beginning inventory of this year is understated. This error would cause:

• A) the period's net income to be overstated.
• B) the period's net income to be understated.
• C) the period end assets to be understated.
• D) None of these is correct.

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Definitions:

Actor-Observer Difference

The bias in attribution whereby actors tend to see their own behavior as due to characteristics of the external situation, whereas observers tend to attribute actors’ behavior to the actors’ internal, personal characteristics.

Halo Effect

The tendency of our general or overall liking for a person to influence our assessment of more specific traits of that person. The halo effect can produce inaccuracy in our ratings of others’ traits and performances.

Complexity-Extremity Effect

The bias where less complex schemas lead to more extreme judgments and evaluations.

Stereotypes

Fixed sets of characteristics that are attributed to all the members of a group; simplistic and rigid perceptions of members of one group that are widely shared by others.