Question 1

The substantial similarity of the AICPA and IFAC Codes of Conduct tends to support the concept of:
A) The ethical conformity doctrine
B) Self-regulation
C) Ethical absolutism
D) Ethical relativism

Accepted Answer

C

Question 2

According to the Responsibility Principle of the AICPA's Code of Professional Conduct,accountants should always:
A) Make sensitive moral judgments
B) Pursue the public interest
C) Maintain client confidentiality
D) Use the highest degree of care in performing all professional activities

Accepted Answer

A

Question 3

An unethical act:
A) Is always illegal as well
B) Is not necessarily illegal
C) Must, at minimum, violate a government regulation
D) Is determined for the accounting profession by the FASB

Accepted Answer

Unethical behavior is not necessarily illegal, but it does go against moral and ethical principles. While some unethical actions may also be illegal, not all actions that are illegal are unethical. The determination of whether an act is unethical is subjective and varies based on individual and cultural values. It is not necessarily determined by government regulations or the Financial Accounting Standards Board (FASB).

Question 4

One hallmark of a profession is:
A) Its members' unrelenting dedication to clients' interests over the countervailing public interest
B) Its classification as a profession by the U.S. Department of Labor
C) Its members' willingness to cooperate with clients by subordinating their judgments in deference to clients' desires
D) A member's exercise of independent judgment

Accepted Answer

The exercise of independent judgment is a hallmark of a profession. This means that a professional is capable of making decisions and providing expert advice based on their own knowledge, experience, and expertise. This is crucial in fields where clients depend on professionals to provide them with accurate and reliable information or services. The other choices are not necessarily indicative of a profession, as dedication to clients' interests can conflict with public interest, classification by the U.S. Department of Labor does not necessarily signify formal recognition as a profession, and subordinating one's judgments to clients' desires can compromise the quality of services provided.

Question 5

Which of the following is not one the four stages in Rest's Four-Component Model of Ethical Decision-Making?
A) Developing moral sensitivity
B) Developing sound moral judgment
C) Developing a willingness to challenge unjust laws
D) Developing the character to initiate actions

Accepted Answer

Rest's Four-Component Model of Ethical Decision-Making includes developing moral sensitivity, developing sound moral judgment, developing the character to initiate actions, and developing the moral courage to sustain actions. The willingness to challenge unjust laws is not explicitly mentioned as one of the stages.

Question 6

Ethical absolutism means that:
A) All cultures share a common set of ethical values
B) Ethical duties are absolute requirements that are, if necessary, imposed by laws
C) Value systems absolutely vary over time as societal views progress
D) A person has an absolute duty to follow ethical principles, even if they diverge from legal mandates

Accepted Answer

The answer of Ethical absolutism means that:
A) All cultures share...

Question 7

According to the Objectivity and Independence Principle of the AICPA's Code of Professional Conduct,accountants should always be independent in providing:
A) All professional services
B) All services to their employer
C) All audit services
D) All tax advisory services

Accepted Answer

The Objectivity and Independence Principle states that accountants should always be independent when providing audit services. This means that they should not have any financial or personal interest in the company being audited, which could compromise their objectivity and professionalism. The other options may also require objectivity and independence, but the AICPA Code of Professional Conduct specifically emphasizes this principle in the context of audit services.

Question 8

Kohlberg's three levels of moral development,in order,focus on:
A) Self-interest, achieving justice, and achieving peer approval
B) Self-interest, adhering to principles over laws, and learning to disregard the need for peer approval
C) The avoidance of punishment, compliance with laws, and compliance with societal expectations
D) Self-interest, achieving peer approval, and the pursuit of justice

Accepted Answer

Kohlberg's three levels of moral development are: 1) Pre-conventional, focusing on self-interest and avoiding punishment; 2) Conventional, focusing on achieving peer approval and compliance with societal norms; 3) Post-conventional, focusing on the pursuit of justice and adherence to universal ethical principles.

Question 9

Self-regulation of the auditing profession in the United States:
A) Has always been, and remains, a distinguishing feature of the auditing profession
B) Historically has characterized the oversight of auditors of privately-held companies, but no longer does
C) Historically has characterized the oversight of auditors of publicly-held companies, but no longer does
D) Never has been a characteristic of the auditing profession because government understandably recognizes the need to assure strict compliance with ethical standards designed to protect the investing public

Accepted Answer

Historically, the auditing profession in the U.S. was self-regulated, especially for auditors of publicly-held companies, but this changed with the establishment of the PCAOB after the Sarbanes-Oxley Act of 2002.

Question 10

If a CPA violates the Principles section of the AICPA Code of Professional Conduct,the CPA is subject to professional disciplinary actions:
A) By the SEC or by the AICPA's Disciplinary Committee
B) By the state accountancy board in the state where the CPA practices accounting
C) Only if the CPA is still an active (non-retired) accounting practitioner
D) Never

Accepted Answer

The answer of If a CPA violates the Principles section...

Question 11

To act ethically,a person always must:
A) Follow the formal expression of a law
B) Follow both the spirit and the formal expression of a law
C) Do the right thing, even if violates a law
D) Adhere to the spirit, intent, and formal expression of a law

Accepted Answer

The answer of To act ethically,a person always must:
A) Follow...

Question 12

The usury laws:
A) Are an example of ethical absolutism
B) Are an example of ethical relativism
C) Bar excessively high interest rates on certain types of loans
D) Reflect the consensus among all countries that interest rates need to regulated by a universal body or multi-governmental entity

Accepted Answer

Usury laws bar excessively high interest rates on certain types of loans, such as payday loans and credit cards. This is not an example of ethical relativism or absolutism, and there is no consensus among all countries about regulating interest rates through a universal or multi-governmental entity.

Question 13

Some societies believe that justice is best determined by juries comprised of ordinary citizens,but other societies believe that justice is best administered by judges.This is an example of:
A) Ethical relativism
B) Ethical absolutism, with certain groups differing in their application of a core ethical principle
C) The ethical standardization doctrine
D) Ethical self-determination

Accepted Answer

This situation represents ethical absolutism, with different groups having varying perspectives on how to apply a core ethical principle. The core principle here is justice, but different societies have different opinions on the best way to administer it. This is not an example of ethical relativism, which is the belief that ethical standards are entirely dependent on a particular culture or society. The other options presented are not suitable explanations of this situation.

Question 14

If a CPA violates one of the Principles of the AICPA's Code of Professional Conduct,the CPA:
A) Will never be subject to disciplinary action by the AICPA
B) May lose the right to practice accounting for a period of time unless the violation was justified
C) Definitely will lose the right to practice accounting for a period of time unless the violation was justified
D) May or may not lose the right to practice accounting, depending on the severity of the violation

Accepted Answer

The answer of If a CPA violates one of the...

Question 15

Creation of the PCAOB was an important event in the development of the accounting profession because it altered the accounting profession's historical policy of self-regulation in the area of:
A) Internal auditing
B) Tax return preparation
C) Tax advocacy on behalf of clients accused of fraud
D) External auditing of publicly-traded companies

Accepted Answer

The creation of the Public Company Accounting Oversight Board (PCAOB) altered the accounting profession's historical policy of self-regulation in the area of external auditing of publicly-traded companies. The PCAOB is responsible for overseeing the audits of public companies and providing oversight to auditors to ensure they adhere to proper auditing standards and practices.

Question 16

In Kohlberg's Six Stages of Moral Development,striving to act in accordance with laws occurs at:
A) Stage 2
B) Stage 4
C) Stage 5
D) Stage 6

Accepted Answer

Striving to act in accordance with laws occurs at Stage 4 of Kohlberg's Six Stages of Moral Development, which is the stage of "law and order." At this stage, individuals recognize the importance of maintaining social order and the need to follow laws and rules to achieve this goal. They view law and authority as legitimate and uphold laws even if they conflict with their own self-interests or personal values.

Question 17

The AICPA and IFAC Codes of Conduct are:
A) Substantially similar, but not identical
B) Identical, except that the AICPA Code applies to Certified Public Accountants and the IFAC Code applies to other professional accountants
C) Identical, except that the AICPA Code applies to accountants licensed in the United States and the IFAC Code applies to professional accountants licensed outside the United States
D) Identical, except that the AICPA Code applies to individual accountants and the IFAC Code applies to accounting firms and other organizations of accountants

Accepted Answer

The AICPA and IFAC Codes of Conduct are substantially similar, but not identical. While there are many similarities between the two codes, there are also some differences in the language and specific provisions. However, they are both intended to provide guidance to professional accountants in maintaining ethical and professional behavior.

Question 18

Which of the following is not expressly addressed by the principle of the AICPA Code of Conduct concerning integrity?
A) The duty to maintain objectivity
B) The duty to respect client personnel
C) The duty to not subordinate one's opinion in favor of the client's viewpoint
D) The duty to avoid conflicts of interest

Accepted Answer

The principle of integrity in the AICPA Code of Conduct emphasizes the importance of honesty, fairness, and straightforwardness in all professional and business relationships. This principle does not explicitly address the duty to respect client personnel, which is covered under the principle of professionalism. The other options (maintaining objectivity, avoiding conflicts of interest, and not subordinating one's opinion to the client's viewpoint) are all specific aspects of the principle of integrity.

Question 19

Legal mandates and ethical mandates are:
A) Identical
B) Different, with legal mandates usually imposing higher behavioral requirements than ethical mandates
C) Different, with ethical mandates usually imposing higher behavioral requirements than legal mandates
D) Both imposed on professional accountants, with legal mandates typically having broader application

Accepted Answer

Legal mandates are requirements set by laws and regulations, while ethical mandates are principles and values that guide professional behavior. While legal mandates may have stricter consequences for non-compliance, ethical mandates often require higher standards of behavior and integrity. Professional accountants are required to comply with both legal and ethical mandates, but ethical mandates are typically more stringent in terms of upholding public trust and maintaining professional standards.

Question 20

Which of the following principles of the AICPA Code of Conduct is not applicable to accountants employed in a financial reporting capacity at a corporation?
A) Independence
B) Integrity
C) Objectivity
D) Due care

Accepted Answer

Independence is not applicable to accountants employed in a financial reporting capacity at a corporation because they are not serving in an independent capacity as auditors or consultants. However, the other principles (integrity, objectivity, and due care) still apply to these accountants.

Quiz 2: Ethical Principles and Reasoning

The substantial similarity of the AICPA and IFAC Codes of Conduct tends to support the concept of:

According to the Responsibility Principle of the AICPA's Code of Professional Conduct,accountants should always:

An unethical act:

One hallmark of a profession is:

Which of the following is not one the four stages in Rest's Four-Component Model of Ethical Decision-Making?

Ethical absolutism means that:

According to the Objectivity and Independence Principle of the AICPA's Code of Professional Conduct,accountants should always be independent in providing:

Kohlberg's three levels of moral development,in order,focus on:

Self-regulation of the auditing profession in the United States:

If a CPA violates the Principles section of the AICPA Code of Professional Conduct,the CPA is subject to professional disciplinary actions:

To act ethically,a person always must:

The usury laws:

Some societies believe that justice is best determined by juries comprised of ordinary citizens,but other societies believe that justice is best administered by judges.This is an example of:

If a CPA violates one of the Principles of the AICPA's Code of Professional Conduct,the CPA:

Creation of the PCAOB was an important event in the development of the accounting profession because it altered the accounting profession's historical policy of self-regulation in the area of:

In Kohlberg's Six Stages of Moral Development,striving to act in accordance with laws occurs at:

The AICPA and IFAC Codes of Conduct are:

Which of the following is not expressly addressed by the principle of the AICPA Code of Conduct concerning integrity?

Legal mandates and ethical mandates are:

Which of the following principles of the AICPA Code of Conduct is not applicable to accountants employed in a financial reporting capacity at a corporation?