Which of the Following Is an Application of Conservatism

question 123

Multiple Choice

Which of the following is an application of conservatism?

• A) reporting inventory at the lower of cost or market
• B) reporting only material amounts in the financial statements
• C) reporting all relevant information in the financial statements
• D) using the same depreciation method from period to period

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Definitions:

Actor-Observer Effect

A psychological bias where people tend to attribute their own actions to situational factors while attributing others' actions to their personalities or character.

Fundamental Attribution Error

The tendency to overemphasize personality-based explanations for behaviors observed in others while underestimating the influence of external factors.

Social-Cognitive Perspective

A view in psychology that focuses on how people learn through observing others, and how they control their behavior through self-regulation and social interaction.

Aggressive Skills

Behaviors aimed at causing harm or asserting dominance, often used in conflict situations.