Question 1

The case titled "Expectations for Professional Judgment by Auditors to Detect Fraud" suggests that:

Accepted Answer

The case suggests that even if auditors follow professional standards, they may still fail to detect material fraud in the financial statements, especially when management has purposefully concealed the fraud. This indicates that option C is the correct answer. The case does not suggest that fraud is a common part of audits or that auditors always detect fraud if they follow professional standards, nor does it imply that auditors shouldn't be expected to discover fraud.  As a result, alternatives A, B, and D are incorrect.

Question 2

The Better Boston beans case emphasizes each of the following pillars of character except for:

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The answer of The Better Boston beans case emphasizes each...

Question 3

What needs to be coupled with moral motivation to act on moral judgment?

Accepted Answer

Moral motivation alone may not be enough to act on moral judgment as it requires courage to overcome potential obstacles or resistance. Courage enables individuals to act on their convictions and principles even in the face of opposition or risk. External pressures such as societal expectations or incentives may provide additional motivation, but ultimately it is the internal drive and strength of character that enables individuals to follow through on their moral beliefs. Loyalty may also be a motivating factor, but it is not always aligned with moral judgment and can lead individuals to act against their own principles.

Question 4

Kohlberg's model suggests that a person

Accepted Answer

Kohlberg's model suggests that moral development is an ongoing process that can be influenced by education and life experiences. Therefore, the answer is B. Kohlberg did not suggest that a person is morally developed early in life and will not change (A), that a person may only change up or down one stage upon becoming an adult (C), or that a person may only go backwards through the stages upon becoming an adult (D).

Question 5

Moral sensitivity can be summarized as

Accepted Answer

Moral sensitivity is the ability to identify ethical situations where principles such as fairness, justice or compassion may be at stake. It is the first step towards making ethical decisions and taking appropriate actions. Therefore, option C is the best choice as it describes the most accurate summary of moral sensitivity.

Question 6

In the case of Eating Time, what is the ethical dilemma facing Kevin Lowe?

Accepted Answer

Integrity versus loyalty to the firm.

Question 7

The ethical dilemma for Brenda in "The Tax Return" case can best be described as a:

Accepted Answer

Brenda's ethical dilemma arises from her conflict between loyalty to her supervisor (who is also her friend) and her obligation to report the item of taxable income. She is aware that her supervisor has deliberately chosen to ignore the income in question, but Brenda feels that it is her professional duty to report it. This conflict is not related to a lack of independence since Brenda is not the auditor of the client entity. Therefore, the correct answer is A.

Question 8

The "Milton Manufacturing" case illustrates:

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The answer of The "Milton Manufacturing" case illustrates:
...

Question 9

In the case of Better Boston Beans, what is the ethical dilemma facing Cindie?

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Question 10

What should be the first step in decision making when faced with an ethical dilemma?

Accepted Answer

The first step in decision making when faced with an ethical dilemma should be to gather all the necessary facts surrounding the problem. Without understanding the situation fully, it is impossible to make an informed decision.

Question 11

The main accounting issue in the Juggyfroot case is:

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Question 12

What are the implications of reasoning at stages 3 and 4?

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Question 13

What is the ethical dilemma in Supreme Designs?

Accepted Answer

The ethical dilemma in Supreme Designs involves unapproved loans to executives, which raises concerns about financial misconduct and lack of transparency.

Question 14

Kevin Greenberg's actions in the "Supreme Designs" case can be said to have been:

Accepted Answer

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Question 15

Cynthia Cooper's actions in the WorldCom case can be best characterized as demonstrating:

Accepted Answer

Cynthia Cooper's actions in the WorldCom case demonstrated persistence in her pursuit of uncovering the fraud, due care in conducting a thorough investigation, and courage in coming forward with the information despite potential consequences. Loyalty is not a significant factor in this context, as her duty was to act in the best interests of shareholders and the company. Therefore, option B, Persistence, due care, and courage best characterize her actions.

Question 16

Richard does his homework as soon as he gets home from school because of fear that his mother will not allow him to go outside.Which stage of Kohlberg's moral development is Richard?

Accepted Answer

Richard is in the pre-conventional stage of moral development because his behavior is motivated by fear of punishment or desire for reward, rather than by any deeper sense of morality or ethical principles.

Question 17

In the Phar-Mor case, Pat Finn's actions reflect ethical reasoning at what stage?

Accepted Answer

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Question 18

What is the social responsibility of business according to Milton Friedman?

Accepted Answer

According to Milton Friedman, the social responsibility of business is to protect the interest to increase profits. He believed that the only responsibility of a business is to maximize profits within the legal and ethical boundaries, and any other social responsibility is the responsibility of the individuals and government, not the business. Therefore, protecting the interests of shareholders is the best choice.

Question 19

A key element in the Imperial Valley Thrift & Loan case is whether the auditors:

Accepted Answer

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Question 20

Kevin Lowe's ethical dilemma in the "Eating Time" case can best be described as whether to:

Accepted Answer

Kevin Lowe's ethical dilemma centers around whether to charge time for his work on the audit, which would increase the client's bill, or not charge the time and risk understating the time spent on the job. The other options are not valid ethical dilemmas in this case.

Quiz 2: Accountants Ethical Decision Process and Professional Judgment