Question 1

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

A

Question 2

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

Ethical absolutism holds that there are universal ethical principles that apply to all individuals and societies. In this case, the core ethical principle is justice. However, different societies have different beliefs about how justice should be administered, with some favoring juries and others favoring judges. This demonstrates that the application of the ethical principle varies among groups, but the underlying principle itself remains universal.

Question 3

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

A hallmark of a profession is the member's exercise of independent judgment. This means that professionals are expected to use their professional knowledge, skills, and expertise to make decisions and provide advice to clients that are in the clients' best interests, even if this is not necessarily what the client wants or asks for. This independence allows professionals to act as trusted advisors and to uphold the highest ethical standards in their work.

Question 4

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)...

Question 5

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

The answer of Kohlberg's three levels of moral development, in...

Question 6

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

The answer of According to the Responsibility Principle of the...

Question 7

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 and ethical mandates are different concepts. Legal mandates are requirements imposed by laws or regulations, while ethical mandates are principles and values that professionals are expected to follow. Ethical mandates usually impose higher behavioral requirements because they are based on fundamental principles such as integrity, objectivity, and professional competence. Although legal mandates are also relevant to professional accountants, ethical mandates tend to have a broader application and require higher standards of behavior.

Question 8

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 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 United States was self-regulated, especially for auditors of publicly-held companies. However, this changed with the enactment of the Sarbanes-Oxley Act of 2002, which established the Public Company Accounting Oversight Board (PCAOB) to oversee the audits of public companies, thus ending the self-regulation era for auditors of publicly-held companies.

Question 10

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

The answer of The substantial similarity of the AICPA and...

Question 11

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 PCAOB (Public Company Accounting Oversight Board) altered the accounting profession's historical policy of self-regulation in the area of external auditing of publicly-traded companies. The PCAOB was established by the Sarbanes-Oxley Act of 2002 in response to accounting scandals such as Enron and WorldCom, to regulate and oversee the auditing of public companies in order to protect investors and improve the reliability of financial reporting. Prior to the creation of the PCAOB, the accounting profession had been responsible for regulating itself in this area.

Question 12

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 13

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

According to Kohlberg's Six Stages of Moral Development, Stage 4 is the "Law and Order Orientation," where individuals strive to act in accordance with laws and authority figures. This stage is characterized by a desire to maintain social order and uphold the law, regardless of personal feelings or opinions. It is seen as a key stage in the development of moral reasoning and the ability to make ethical decisions.

Question 14

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. Both codes cover topics such as confidentiality, integrity, objectivity, and professional competence. However, there are some differences between the two codes based on each organization's jurisdiction, focus and scope of work. For example, the AICPA Code applies specifically to Certified Public Accountants (CPAs) in the United States, while the IFAC Code covers all professional accountants globally.

Question 15

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

The principle of independence is not applicable to accountants employed in a financial reporting capacity at a corporation because they are considered part of the management team and not an independent third party providing services to the corporation. However, the principles of integrity, objectivity, and due care still apply to their work.

Question 16

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 a course of action. "Developing a willingness to challenge unjust laws" is not included as one of the stages in this model.

Question 17

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

An unethical act is not necessarily illegal. Ethics refers to what is right or wrong behavior, while legality refers to laws and regulations established by the government. While there may be overlap between the two, actions can be unethical without breaking any laws.

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 concerns acting with honesty, transparency, and maintaining a high level of ethical standards. While respecting client personnel is important in forming professional relationships, it is not expressly addressed under the principle of integrity.

Question 19

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

According to the Objectivity and Independence Principle, accountants should always be independent when providing audit services. This means that they should maintain an unbiased and impartial attitude throughout the audit process and not be influenced by any potential conflicts of interest. This helps to ensure that the financial statements are reliable and trustworthy, which is essential for stakeholders such as investors and creditors. However, this principle does not apply to all professional services in general, nor does it apply specifically to tax advisory services. Therefore, choices A, B, and D are incorrect.

Question 20

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 are legislations that prescribe a maximum interest rate that lenders can charge on certain types of loans. These laws are implemented to protect borrowers from predatory lending practices and excessive interest rates. Therefore, they are not an example of ethical relativism or absolutism. However, they reflect the ethical principle of fairness and responsibility in lending. Additionally, there is no consensus among all countries that interest rates need to be regulated by a universal or multi-governmental body, as different countries have different economic conditions and financial systems.

Quiz 2: Ethical Principles and Reasoning

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

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:

One hallmark of a profession is:

To act ethically, a person always must:

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

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

Legal mandates and ethical mandates are:

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

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

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

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:

Ethical absolutism means that:

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

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

An unethical act:

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

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

The usury laws: