How Does One Avoid Overconfidence Bias

question 23

Essay

How does one avoid overconfidence bias

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Definitions:

Revenue

Cumulative income generated through the primary business functions of a company, involving the transaction of goods or services.

Closing Entry

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent ones and prepare the company's books for the next period.

Income Summary

An account in the ledger that is used to gather all temporary accounts during the closing process, to transfer their balances to permanent accounts.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to reinvest in its core business or to pay debt.