ETHICAL OBLIGATIONS AND DECISION
MAKING IN ACCOUNTING TEST BANK 2026
EXAM REVIEW WITH COMPLETE QUESTIONS
AND ANSWERS
◉ System 1 Thinking. Answer: intuitive system of processing
information: fast, automatic, effortless, and emotional decision processes
◉ System 2 Thinking. Answer: slower, conscious, effortful, explicit, and
a more reasoned decision process.
◉ Framing. Answer: people have a tendency to make different decisions
based upon how a question is framed so that other factors are framed as
more important than ethical standards.
◉ Overconfidence. Answer: People have a tendency to believe that they
are more ethical than they actually are, which can cause them to make
decisions with serious ethical implications without proper reflection.
◉ Incrementalism. Answer: may influence the behavior of even well-
intentioned people who find themselves in situations in which ethical
corners are being cut. it can be difficult to notice gradual changes in
one's environment so that cutting corners grow until violations of the
law occur.
, ◉ Cognitive Dissonance. Answer: inconsistency between our thoughts,
beliefs, or attitudes and our behavior creates the need to resolve
contradictory or conflicting beliefs, values, and perceptions.
◉ Cognitive Biases. Answer: beliefs or thoughts about the world, other
people, and ourselves which can negatively influence our decision-
making process.
◉ Ethnocentrism. Answer: perception that "our way" is normal and
preferred and that other ways are somehow inferior
◉ Hindsight Bias. Answer: tendency to overestimate positive traits and
to underestimate our weaknesses; tendency to view events as more
predictable than they really are
◉ Superiority Bias. Answer: executives become overconfident in their
abilities and make decisions based on incomplete or inaccurate
information
◉ Overconfidence Bias. Answer: leads to the reluctance to learn more
about how internal controls work before determining whether they are
working as intended
MAKING IN ACCOUNTING TEST BANK 2026
EXAM REVIEW WITH COMPLETE QUESTIONS
AND ANSWERS
◉ System 1 Thinking. Answer: intuitive system of processing
information: fast, automatic, effortless, and emotional decision processes
◉ System 2 Thinking. Answer: slower, conscious, effortful, explicit, and
a more reasoned decision process.
◉ Framing. Answer: people have a tendency to make different decisions
based upon how a question is framed so that other factors are framed as
more important than ethical standards.
◉ Overconfidence. Answer: People have a tendency to believe that they
are more ethical than they actually are, which can cause them to make
decisions with serious ethical implications without proper reflection.
◉ Incrementalism. Answer: may influence the behavior of even well-
intentioned people who find themselves in situations in which ethical
corners are being cut. it can be difficult to notice gradual changes in
one's environment so that cutting corners grow until violations of the
law occur.
, ◉ Cognitive Dissonance. Answer: inconsistency between our thoughts,
beliefs, or attitudes and our behavior creates the need to resolve
contradictory or conflicting beliefs, values, and perceptions.
◉ Cognitive Biases. Answer: beliefs or thoughts about the world, other
people, and ourselves which can negatively influence our decision-
making process.
◉ Ethnocentrism. Answer: perception that "our way" is normal and
preferred and that other ways are somehow inferior
◉ Hindsight Bias. Answer: tendency to overestimate positive traits and
to underestimate our weaknesses; tendency to view events as more
predictable than they really are
◉ Superiority Bias. Answer: executives become overconfident in their
abilities and make decisions based on incomplete or inaccurate
information
◉ Overconfidence Bias. Answer: leads to the reluctance to learn more
about how internal controls work before determining whether they are
working as intended
