Ludo Authorizes the Expenditure of an Additional $200,000 for the Production

question 144

Multiple Choice

Ludo authorizes the expenditure of an additional $200,000 for the production of a new product despite mounting concerns from top management that it will be unprofitable. His behaviour illustrates the phenomenon of ___.

• A) confirmation bias
• B) represenation bias
• C) anchoring bias
• D) availability bias
• E) escalation of commitment

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Definitions:

Credit

An arrangement where goods, services, or money is received in exchange for a promise to pay back a specific amount in the future.

Post Reference Notation

An alphanumeric or numeric code used in accounting to indicate a journal entry has been posted to a particular ledger account.

Journal

A chronological record of all financial transactions, used to transfer information to the general ledger in the accounting process.

Journal Entries

Records of financial transactions in the accounting system, ensuring that the debit and credit balance.