Cognitive Biases Quiz: Identify Your Blind Spots with This Test

Study Notes

A cognitive bias is an error in thinking that affects decision-making and judgment
The status quo bias is a cognitive bias where people tend to maintain the current situation rather than making a change
This bias manifests in decision-making by making people prefer the default option rather than considering alternative options

Default options have a significant impact on decision-making, as people tend to stick with the default choice
This is why default opt-out options often result in higher participation rates than default opt-in options
The power of default options explains why people often continue to receive spam messages despite not wanting them

Using mental shortcuts (heuristics) in decision-making can lead to errors and biases
The problem with using mental shortcuts is that they can lead to inaccurate or incomplete information being used in decision-making

The purpose of closing entries in accounting is to transfer the temporary account balances to the retained earnings account
The accounts closed during the closing process are revenue, expense, and dividend accounts
An income summary account is used in the closing process to temporarily hold the revenue and expense balances
Accountants typically perform the closing process at the end of an accounting period (e.g., year, quarter)
The goal of making closing entries is to reset the temporary accounts to zero and update the retained earnings account