Strange Financial Statement Relationships That Are Examples of Analytical Anomalies

question 28

Multiple Choice

Strange financial statement relationships that are examples of analytical anomalies include all of the following except:

• A) Increased revenues with decreased inventory.
• B) Increased revenues with increased cash flows.
• C) Increased revenues with decreased receivables.
• D) Increased inventory with decreased payables.

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Definitions:

Relative Comparisons

The act of evaluating something in relation to another similar item.

Availability Heuristic

A cognitive shortcut that relies on the immediate examples that come to a person’s mind when evaluating a specific topic, concept, method or decision.

Representative Heuristic

A mental shortcut that involves making a probability judgement by comparing an object or event to a prototype of the object or event.

Additive Strategy

An approach where elements are added together to solve problems or make decisions, often seen in mathematics or decision-making processes.