Deck 1: Ethical Reasoning: Implications for Accounting

Question 1

An accountant who blows the whistle on financial wrongdoing by his/her employer by going outside the entity violates:

A) The due care principle
B) Confidentiality
C) One's reliability obligation
D) Public interest obligation

Answer 1

B

Question 2

Ethical relativism can best be described as a:

A) Point of view that morality is relative to the norms of one's culture.
B) Concept that holds that integrity should be maintained in the face of pressure by others.
C) An ethical reasoning method that holds one should always act out of self-interest.
D) An ethical reasoning method that holds one should always consider the effect of one's actions on others.

Answer 2

A

Question 3

Which of the following is NOT a pillar of character according to the Josephson Institute?

A) Caring
B) Citizenship
C) Respect
D) Judgmental

Answer 3

D

Question 4

Which of the following is NOT an element of trustworthiness according to the Six Pillars of Character?

A) Reliability
B) Loyalty
C) Fairness
D) Honesty

Question 5

Which of the following characteristics is NOT part of behaving with empathy?

A) Being loyal to one's friends
B) Being understanding of one's friends
C) Being sensitive to the feelings of one's friends
D) Being caring about one's friends

Question 6

Objectivity requires that a CPA should:

A) Maintain a mental attitude of intellectual honesty and independence
B) Maintain a mental attitude of intellectual honesty and impartiality
C) Act in accordance with the best interests of one's client
D) Act in accordance with the best interests of one's employer

Question 7

The ancient Greeks thought of the virtues as characteristics of behavior that:

A) Could lead to a good life
B) Make up the "six pillars of character"
C) Support the rights theory
D) Rationalize unethical actions

Question 8

Which of the following characteristics does NOT describe the importance of integrity in decision making?

A) Acting out of moral principle
B) Being loyal to one's superior
C) Having the courage to do the right thing
D) Not subordinating professional judgment to others

Question 9

Which of the following situations would be considered ethical?

A) The cashier at Wal-Mart gives you $5 more than you were supposed to receive and you don't do anything about it
B) You accidentally back into a car at Wal-Mart and leave your information for them to call
C) Receiving fake $20 bills and using them in a store while knowing they are fake
D) Finding a phone in a restaurant and keeping it

Question 10

Which of the following elements does NOT make up an integral part of what is meant by "ethics"?

A) Accepted standards of behavior
B) Knowing the difference between right and wrong
C) Always following the law
D) The moral point of view

Question 11

Social networking is the norm for many workers, and some workers spend at least 30 percent of their workday linked up to one or more networks. The Ethics Resource Center conducted a survey in which social networkers admitted each of the following except:

A) They think about risks before posting online.
B) They comment on their personal sites about their company if it was in the news.
C) They often comment on their personal sites about managers, coworkers, and even clients.
D) They always consider the consequences of their postings on others.

Question 12

Treating others fairly encompasses treating them:

A) Equally, impartially, and responsibly
B) Equally, responsibly, and openly
C) Impartially, openly, and diligently
D) Equally, impartially, and openly

Question 13

If one's reputation is tainted it may create a:

A) Conflict of interest
B) Loss of independence
C) Lack of trust
D) Loss of objectivity

Question 14

Which of the following characteristics does NOT describe the behavior of Cynthia Cooper in the WorldCom fraud?

A) Persistence
B) Competence
C) Integrity
D) Conformity

Question 15

Responsibility goes hand in hand with:

A) Respect
B) Loyalty
C) Courage
D) Accountability

Question 16

Respect is an important character of behavior because:

A) It entails a loyalty obligation to one's superior
B) It enables one to perform professional services competently
C) It is critical to maintaining one's integrity
D) It encompasses attributes of how we should treat others

Question 17

The Public Interest Principle in the AICPA Code of Professional Conduct recognizes:

A) The importance of integrity in decision making
B) The importance of loyalty to one's superior
C) The importance of whistleblowing when financial wrongdoing exists
D) The importance of maintaining confidentiality

Question 18

Jane finds a material misstatement while auditing a client's accounts receivables. Her senior tells her to ignore the misstatement so that the client does not get upset. Jane wants to be viewed as a team player in order to advance in the firm so Jane follows her senior's instructions and ignores the misstatement. Which ethical theory did Jane use to make her decision?

A) Egoism
B) Justice
C) Virtue ethics
D) Utilitarianism

Question 19

Which of following is false of active social networkers?

A) They do not discuss company information online.
B) They witness more misconduct among their coworkers.
C) They experience more retaliation when they report their colleagues.
D) They think about risks before posting online.

Question 20

What is the common characteristic of Aristotle's virtues and ethical standards for CPAs?

A) Truthfulness
B) Integrity
C) Loyalty
D) Due care

Question 21

The biggest problem in applying virtue theory to decision making is:

A) It can be difficult to identify virtues
B) It relies on moral absolutes in decision making
C) It can be difficult to determine virtues to distinguish equals from unequal claims in decision making
D) Conflicts between virtues may make decision making more difficult

Question 22

Eddie paid an $8 restaurant check with a $10 bill. The waitress gave him $12 back. The most ethical action for Eddie is to:

A) Keep the extra $10
B) Inform the waitress of her overpayment
C) Inform the manager of the restaurant of the overpayment
D) Leave a larger tip for the waitress

Question 23

Aristotle believed that ________ always preceded the choice of action.

A) Empathy
B) Due Care
C) Deliberation
D) Loyalty

Question 24

George is in the middle of a high stakes poker game when he notices what he thinks is cheating by another player. It appears to George that this player took a card from his lap and switched it with a card that he was dealt. If George is a utilitarian thinker, he should:

A) Accuse the alleged cheater of cheating in front of all the other players
B) Consider what might happen if he accuses the player of cheating and he is wrong
C) Speak to the alleged cheater during a regularly scheduled break and tell him not to do it again
D) Forget about the whole matter

Question 25

Which of the following elements is not an integral part of Rights Theory?

A) Act based on the consequences of one's actions on others
B) Treat people as an end and not merely as a means to an end
C) Act in a way you would want others to act in similar situations
D) Act in a way that is universally accepted

Question 26

The credibility standard in the Statement of Ethical Professional Practice of the IMA requires that an accounting professional should:

A) Communicate information fairly and objectively
B) Disclose all relevant information that might affect the intended user's understanding of the reports, analyses or recommendations
C) Disclose delays or deficiencies in information, timeliness, processing or internal controls in conformance with organization policy and the law
D) All of the above

Question 27

Sally is the only student from a foreign country in an Auditing class. On the day of the midterm exam, Sally asks the teacher whether she could use a dictionary to translate English words to her native tongue so she can better understand the questions. What do you think the instructor should do if she follows the ethical principle of justice?

A) Allow Sally to use the dictionary since she is at a disadvantage
B) Not allow Sally to use the dictionary because she should know enough English to get by
C) Allow the other students to bring in some tool to give them an advantage
D) None of the above

Question 28

Deontology deals with:

A) Rights of others and duties toward them
B) Consequences of actions
C) Following prescribed virtue characteristics
D) Following the law as an element of ethical behavior

Question 29

Janice is a staff accountant in the accounting firm of Obama and Biden. She is assigned to the audit of HealthCare Associates. On the very first day Janice noticed that the accounting manager of the client took money out of the petty cash fund and put it in his pocket. The best action for Janice to take is:

A) Ignore the situation because Janice doesn't know why the manager pocketed the money
B) Inform her immediate supervisor of what she observed
C) Tell another staff accountant who is a friend and ask for her advice
D) Tell the superior of the accounting manager what she has observed

Question 30

The method of ethical reasoning that deals with making decisions after considering the interests of others is:

A) Egoism
B) Enlightened Egoism
C) Utilitarianism
D) Rights Theory

Question 31

The Independence Principle in the AICPA Code applies to:

A) All accountants and auditors
B) All CPAs regardless of professional services
C) All CPAs who render attestation services
D) All members of the audit committee

Question 32

A CPA would violate the Due Care Principle if he/she:

A) Undertook a professional engagement without having the requisite background, knowledge and experience.
B) Specializes in the industry of the client, even offering training classes for other accounting firms on the industry.
C) The accounting firm uses two external partner reviews on high risk audits or clients.
D) Performs tax services for an audit client with audit committee approval.

Question 33

Kelly is the controller of a small company. One day the CFO comes in and tells her to lower the estimate of uncollectible accounts receivable. Kelly insists her numbers are correct as is. The CFO tells her it will mean her job at the company if she doesn't go along with the smaller estimate. The primary virtue that would enable Kelly to resist the pressure to manipulate the number is:

A) Loyalty
B) Integrity
C) Caring
D) Objectivity

Question 34

The method of ethical reasoning that requires selecting the correct moral rule that produces the greatest benefits over harms is:

A) Act Utilitarianism
B) Rule Utilitarianism
C) Rights Theory
D) Justice

Question 35

Teleology deals with:

A) Consequences of actions
B) Fairness to others
C) Respecting the rights of others
D) Following prescribed virtue characteristics

Question 36

The biggest problem in implementing a utilitarian approach to decision making is:

A) The interests of others may be subservient to self-interests
B) It fails to consider the interests of others
C) It can be difficult to weigh all the consequences of actions
D) It relies on moral absolutes

Question 37

Under the IMA's standards of ethical practice, an accounting professional can consider informing authorities or individuals not employed by the organization when an ethical dilemma occurs about an accounting or financial reporting matter that remains unresolved if he/she:

A) Believes there is a clear violation of the law
B) Contacts his/her immediate superior who says to forget about the matter
C) Informs the external auditors who tell him/her to inform the appropriate authorities
D) Believes there has been an ethical violation

Question 38

The ethical reasoning method that is based on treating equals, equally and unequals, unequally is:

A) Enlightened egoism
B) Act utilitarianism
C) Justice
D) Virtue

Question 39

The biggest problem in implementing a rights approach to decision making is:

A) The interests of others may be subservient to self-interests
B) It is difficult to weigh harms and benefits
C) It relies on moral absolutes
D) It can be difficult to determine criteria to distinguish equals from unequal claims

Question 40

The method of ethical reasoning that evaluates actions in terms of harms and benefits is:

A) Act Utilitarianism
B) Rights Theory
C) Justice
D) Virtue

Question 41

Virtue ethics is:

A) Doing what is right
B) One's duty to act in a socially acceptable manner
C) One's ability to meet or exceed their potential
D) What one ought to do when presented with an ethical dilemma

Question 42

Your manager asks you to "cook the books" to support a loan application at the local bank. The manager insists it is a one-time request. What should you do?

A) Go along with the manager's request
B) Talk to others in the company to determine how they handled such situations
C) Refuse to go along with the request
D) Inform the audit committee

Question 43

The motive of "duty" is most associated with ________.

A) Egoism
B) Deontology
C) Utilitarianism
D) Justice

Question 44

When applying Utilitarianism to judge actions, what is the only thing that matters?

A) Motives
B) Fairness
C) Consequences
D) Rights

Question 45

Michael Josephson, founder of the Josephson Institute of Ethics, is credited for developing:

A) Book of virtues
B) Care and response orientation
C) Six Pillars of Character
D) Rights theory

Question 46

Decisions that are made based on the underlying circumstances of a particular matter can be best characterized by:

A) Ethical Collectivism
B) Situational ethics
C) Ethical relativism
D) Judgmental Individualism

Question 47

Utilitarian philosophers are divided into two types: act utilitarian and

A) rule utilitarian.
B) egoistic utilitarian.
C) ethical utilitarian.
D) beneficial utilitarian.

Question 48

Jason is the fastest worker on the audit of a company for the firm Zits LLP. Other Zits workers take twice as long to complete the equivalent amount of work as Jason. One day Jason is approached by the other workers and is asked to slow down "You are exceeding the time budget for the audit and making the rest of us look bad," said one staff member. From an organizational, ethical point of view, the best thing for Jason to do is:

A) Tell the other staff members that he will use the time he saves on his budget to help them to meet their budget by picking up their slack
B) Approach the supervisor to discuss the pressure of fellow staff to slow down on doing audit work
C) Explain to the other staff members that he works diligently and they should do the same
D) Tell the other staff members to mind their own business

Question 49

Assume you are taking an exam and you clearly see that your friend is cheating. Your professor does not notice it. What is the most appropriate action for you to take if you are an ethical person?

A) You pretend not to notice it.
B) You discuss the matter with your friend after the exam.
C) You also cheat the exam because your friend does.
D) Send a text message to your friend and tell them to stop cheating.

Question 50

Bob is being pressured by his superior to go along with improper accounting and told he is expected to be a team player. Which of the following statements best characterizes those expectations?

A) Independence
B) Confidentiality
C) Loyalty
D) Utilitarianism

Question 51

Virtue ethics emphasizes development of good habits of character. What should be the greatest reward of practicing good habits of character, according to MacIntyre?

A) External rewards
B) Loyalty from others
C) Internal rewards
D) Authority of rules

Question 52

Steve is deep in debt due to a gambling problem. He is the bookkeeper for a family-owned business, Cal Poly Greenery. The company has only three employees - Steve, the husband, and the wife. All three have been friends for many years. One day the loan shark who lent Steve $20,000 comes knocking at his door asking for repayment of the loan. Steve convinces the loan shark to give him another day. The following day Steve writes a check on the company's books to himself for $20,000. Since he reconciles the bank accounts and prepares the financial statements, Steve knows it's unlikely the owners will ever know about what he has done. From an ethical perspective, Steve has:

A) Violated the trust placed in him by the owners
B) Risked his reputation if the loan shark finds out
C) Risked his ability to continue working for Cal Poly Greenery
D) All of the above

Question 53

Internal rewards of accounting practice include:

A) Wealth and prestige
B) Success and power
C) Integrity and Excellence
D) Achievement and notoriety

Question 54

Greatest good for the greatest number of people is the theory of ________.

A) Rights
B) Deontology
C) Utilitarianism
D) Justice

Question 55

What is the one virtue that people should want in a boss, to trust a boss?

A) Diligence
B) Commitment
C) Honesty
D) Sense of humor

Question 56

Decisions that are made based on the underlying cultural factors can be best characterized by:

A) Ethical Collectivism
B) Situational ethics
C) Ethical relativism
D) Judgmental Individualism

Question 57

The best restatement of Kant's categorical imperative is:

A) Do to others as you would have everyone do unto you
B) Consider others needs before you act
C) That those with a smaller stake should have a smaller say compared to those with a bigger stake
D) That the ends justifies the means

Question 58

When making a donation at the local Goodwill, Martha tells the clerk that her old computer is in perfect working order when she knows it is not, just so she can deduct more on her taxes. Which theory best describes Martha's behavior?

A) Utilitarianism
B) Deontology
C) Egoism
D) Justice

Question 59

Ty is a rising star at Texas State Country & Western Stores. He is the controller of the company. His wife, Rosie, is the lead auditor of the CPA firm that examines Country & Western's financial statements and issues an audit opinion. Given the nature of the relationships, Rosie would violate what ethical standard if she is allowed to conduct the audit:

A) Integrity
B) Due care
C) Independence
D) Responsibility

Question 60

The most important duty of public accounting is to the:

A) Securities Exchange Commission
B) Current stockholders
C) Management
D) Investing public

Question 61

In the Capitalization versus Expensing case the main ethical issue is whether Gloria Hernandez should:

A) Capitalize or expense $1 million of expenditures
B) Report her superiors' actions to the CEO
C) Talk to the audit committee about the pressure imposed by her supervisor
D) Become a whistle blower

Question 62

In the Shifty Industries case, the primary ethical issue can be stated as:

A) Whether an accountant should claim a higher section 179 deduction than allowed by law.
B) Whether an accountant should claim lack of diligence of other staff accountants.
C) Whether an accountant should claim inflated expenses on the company tax return.
D) Whether an accountant should claim lack of competence by other staff accountants.

Question 63

When an employee is given a job evaluation, he has a right to expect:

A) Fair evaluations
B) Caring and empathy on the part of the evaluator
C) 360 degree evaluations from everyone in the firm
D) Evaluations of technical, not personal skills

Question 64

The main issue in the Unintended Consequences case is:

A) Should the student who accepted an offer from one CPA firm back off from that promise in order to accept the offer of another firm deemed more preferable to the student
B) Should Regas back off from the dating relationship she developed with Giles
C) Should the CPA firm renege on its offer of employment to a student after realizing it made one offer too many to student candidates for staff positions
D) Should Tybell quit the firm because of conflicts with his superiors

Question 65

A difficult choice between two moral principles that are in conflict with one another is known as a/an:

A) ethical relativism
B) situational ethics
C) ethical dilemma
D) conflict ethics

Question 66

The cultural value of Individualism reflects:

A) The degree a society reinforces individual or collective achievement
B) Tolerance for uncertainty and ambiguity in society
C) The degree of equality between people in a society
D) Whether a society has a long-term or short-term orientation

Question 67

In the Cleveland Custom Cabinets case, the owner of the company thought it was all right to manipulate the financial statement numbers primarily because:

A) He wanted to improve earnings to increase the share price of company stock
B) The treatment recommended by the owner for estimating overhead conformed to GAAP
C) He was the sole owner of the company and controlled the board of directors
D) He got approval from the auditors

Question 68

The basic and fundamental beliefs that guide or motivate attitudes or actions are called:

A) Relativism
B) Egoism
C) Morals
D) Values

Question 69

Hofstede's Cultural Dimensions helps explain how workers from different cultures might react in the workplace. The Long-Term Orientation dimension could help explain the different approaches toward:

A) Dealing with uncertainty
B) Dealing with differences in power structure
C) Emphasizing short-term and long-term results
D) Emphasizing results over process

Question 70

In the Lone Star School District case, the auditors were mostly concerned about:

A) The behavior of a staff member toward client personnel
B) The falsification of the financial statements
C) The lack of independence of the audit team
D) The lack of documentation for travel and entertainment expenses

Question 71

Civility requires all but the following:

A) Restraint
B) Politeness
C) Respect
D) Disregard

Question 72

Which of the following is true of the relationship between civility and ethics?

A) One can be both ethical and uncivil.
B) One can be both civil and unethical.
C) One can use others, be a bully and be ethical.
D) One can have empathy and caring for others and be uncivil towards them.

Question 73

In the Harvard Cheating scandal case, using ethical reasoning who is at fault for the situation?

A) The professor
B) Teaching assistants
C) Students who cheated
D) All of the above

Question 74

The relationship between legal and ethical can best be expressed as:

A) Always follow the law regardless of consequences for others
B) Ethical behavior requires less than legal behavior
C) Legal and ethical are the same thing
D) Ethical behavior requires us to do more than required by the law and less than the law allows

Question 75

Which of the following is NOT a likely rationalization a student might use to justify cheating on an exam?

A) Ethical relativism
B) Situational ethics
C) Cultural conditioning
D) Fair treatment

Question 76

In the Giles and Regas case, the primary ethical issue can be stated as:

A) Whether a subordinate should blow the whistle on a superior who has violated ethical policy
B) Whether two staff members of the same rank should be allowed to date
C) Whether a superior should become involved in a dating relationship with a subordinate
D) Whether a student should renege on the acceptance of an offer from one firm after receiving an offer from a second firm

Question 77

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

A) Date another staff member of the CPA firm
B) Inform his supervisor about a lack of diligence of other staff accountants
C) Quit his job because he can't meet the firm's expected quality of work
D) Devote time on an audit and not charge it to the job

Question 78

A danger of situational ethics is that it can be used to rationalize a wrong-doing. Such rationalizations may be seen in all of the following examples except:

A) Cheating at the University of North Carolina
B) Hiding Anne Frank's family to escape Nazi terror.
C) Betty Vinson's actions at World Com
D) David Walker's actions at the Government Accountability Office

Question 79

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

A) Loyalty of co-worker versus trust of co-worker
B) Trust of co-worker versus the honesty of the workplace
C) Honesty of the workplace versus the privacy of an individual
D) Privacy of an individual versus loyalty of co-worker

Question 80

In the Moral Turpitude case, the primary ethical issue in the case is:

A) Falsification of financial statements
B) Violation of the acts discreditable
C) The lack of independence of the audit team
D) An inappropriate relationship between a supervisor and subordinate