AutoPROs Recalled Thousands of Tires When Several People Died in Traffic

question 1

Multiple Choice

AutoPROs recalled thousands of tires when several people died in traffic accidents blamed on faulty tires. This is an example of which of the following?

• A) avoiding the risk
• B) self-insuring against the risk
• C) reducing the risk
• D) a loss-prevention program

Know the requirements for exchanging transactions under GAAP, including the concept of commercial substance.

Understand the accounting for intangible long-lived assets and depreciation methods.

Recognize how companies report asset revaluations under IFRS and the impact on equity.

Understand the criteria for extraordinary item treatment and asset retirement obligations.

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Definitions:

Confirmation Bias

The inclination to seek out, understand, prefer, and remember data in a manner that supports one's already held beliefs or theories.

Law of Small Numbers

The erroneous belief that small samples will accurately represent the larger population from which they are drawn.

Law of Small Numbers

A cognitive bias that leads people to draw broad conclusions from small samples of data.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.