Which of the Following Questions CANNOT Be Answered from a Balance

question 2

Multiple Choice

Which of the following questions CANNOT be answered from a balance sheet?

• A) What has caused the changes in cash held during the period?
• B) Is the company soundly financed?
• C) Can the company pay its bills on time?
• D) Should a dividend be declared?

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Definitions:

Availability Bias

A cognitive bias that causes people to overestimate the likelihood of events based on their recall of immediate examples.

Representativeness Bias

A cognitive bias in decision-making where individuals judge probabilities or make judgments based on how much one thing resembles another, often leading to errors in assessment.

Conjunction Fallacy

A logical error where people wrongly assume that specific conditions are more probable than a single general one.

Framing Error

A cognitive bias where information is presented or perceived in a way that influences judgment and decision-making, potentially leading to incorrect conclusions or actions.