You Have Just Accepted Your First Job Out of College

question 54

Essay

You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or Statement of Accounts) for his first year of operations ended December 31, 2010.
Which of the following accounts do you think might need to be adjusted before an accurate set of financial statements could be prepared?

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Definitions:

Representativeness Heuristic

A decision-making heuristic in which people make judgments about samples according to the populations they appear to represent.

Judgments

The cognitive processes of evaluating information or situations and making decisions or forming opinions.

Positive Instance

An example that fits or supports a particular rule or classification, used in the process of hypothesis testing.

Negative Instance

A term or example that does not fit a specific rule or pattern under investigation, often used in the study of logic and cognition.