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Marzella Corp

question 27

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Marzella Corp.is analyzing a project that involves expanding the firm into a new product line.The project includes the construction of a new manufacturing facility and the creation of a new distribution system.The project's financial projections will tend to have which one of the following characteristics if the person compiling those projections suffers from overoptimism?

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Definitions:

Understated

Describes when figures or values are represented in accounting records as less than their true or actual amount.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal, used to verify the accuracy of the bookkeeping system.

Debit

An accounting entry that increases an asset or expense account, or decreases an equity, liability, or revenue account.

Credit

An accounting entry representing an increase in assets or decrease in liabilities, and is also commonly used to refer to the provision of funds based on a trust agreement.

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