Question

List and explain four logical fallacies giving example from the accounting or business environment. Why should accounting graduates be aware of fallacious arguments?

Answer 1

4 Logical Fallacies from the accounting or Business Enviroment are:

1. Argument of Authority: Where in the fallacy goes like this " Manager X believes Y, and Manager X is a at a higher Position and therefore Y is true." Just because any employee is not working at authoritative position does not mean he doesnt have valuable information to contribute too.
2. Hasty Generalization: This fallacy states that " Suppose a analysts within a week of new project states that this project wont work as i have seen no enthusiasm in the end customers" Analysts within a week of starting a new project is jumping towards conclusion which is too fast in the business world. He shouldnt generalize his pattern of analyzing.
3. False Dichotomy : This can be said to have occured when the analysts oversimplifies reality by reducing it to only two choices. Suppose a company is having problems keeping up with competition. It is later discovered that a system that allows the company to store, manage and analyze customer 's buying patterns would have help in customer statisfaction and staying ahead of competition In such case if the manager boils down only to two possiblity of buying of developing the CRM it might create false dichotomy. Because in such scenarios lot of possible options are available.
4. Incorrect Association: Lets Assume that Company A lost lot of sales during the holiday season. One could assume that the holiday caused reduction in sales. But it is also possible that the product quality decreased which caused reduction in sales or the morale of salesman decreased which caused reduction in sales. Therefore there are lot of the other factors aprart from the obivious ones . Incorrectly linking with causation constitutes to a logical fallacy.

Reason an account graduate should be aware of the Logical Fallacies Are:

Logical Fallacies is something that can be taught to the youngest readers such as ad-hominem (insulting the man), slippery slope or appeals to emotion. It is important for an accounting grduate so that it cultivates the habit of digging deeper into flaws in reasoning. For any accounting graduate who is analyizing a companys balance sheet should have an acumen to dig deeper into every numeric and financial data that has been available.