Consider the Following Short Case as You Respond to the Question

question 24

Multiple Choice

Consider the following short case as you respond to the question: Amanda is a partner in a CPA firm; she supervises a staff of ten professionals, some of whom are already licensed CPAs and some of whom are still working toward licensure.She is responsible for audits of independent bookstores in California, Nevada and Arizona.Amanda is concerned that the less experienced professionals she supervises are repeating the mistakes she and the more experienced professionals on her team made when they began auditing.She therefore wants to create a knowledge management system.In assigning personnel to a specific audit team, Amanda normally has one licensed CPA working with a professional who is not yet licensed.Rather than considering alternative approaches to the audit that might achieve the same goals more efficiently, the licensed CPAs in Amanda's firm rely on their past practice in conducting audits.The licensed CPAs are therefore demonstrating:

• A)Bounded rationality.
• B)At least one countermeasure for information overload.
• C)Both bounded rationality and at least one countermeasure for information overload.
• D)Neither bounded rationality nor at least one countermeasure for information overload.

---

Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan’s balance.

Acquisition Cost

The total cost incurred to acquire an asset, including the purchase price and additional expenses necessary to bring it to its intended use.

Present Value

The present value of a future amount of money or series of cash flows, considering a certain rate of return.

Annuity Due

An annuity for which payments are made at the beginning of each period.