Deck 2: Ethics in Business

Question 1

To be effective, an ethical compliance program must be integrated throughout a firm.

Answer 1

True

Question 2

The attitude of management does not impact the ethical standards or behavior of the company ' s employees.

Answer 2

False

Question 3

One benefit of the corporate form is that the ethical duties to different groups are clearly stated.

Answer 3

False

Question 4

Acting in good faith gives a business firm a better chance of defending its actions in court.

Question 5

Internal audits monitor compliance with law and a company's code of ethics or conduct.

Question 6

The Public Company Accounting Oversight Board is responsible for management, training, and testing of all accountants in the United States.

Question 7

Congress enacted the Sarbanes-Oxley Act to help reduce unethical management decisions .

Question 8

Obeying the law will fulfill a company ' s ethics obligations.

Question 9

Ethics is the study of how to make the most money.

Question 10

Because shareholders, employees, and management all share the same goals, managers rarely face ethical conflicts.

Question 11

Most large companies have implemented ethics training programs.

Question 12

Adopting and enforcing a code of ethics does not deter unethical behavior in the workplace.

Question 13

An ethics committee should not be part of a corporate department but should be independent and cross-departmental.

Question 14

It can be difficult to predict with certainty how a court will apply a given law to a particular situation.

Question 15

Ignorance of the law will excuse a business owner from liability for violating a statute.

Question 16

The availability of information on the Internet has made it easier to predict the legal and ethical implications of a decision.

Question 17

Ethics is a branch of philosophy that focuses on morality.

Question 18

The term moral minimum is best defined as the highest degree of ethical behavior expected of a firm.

Question 19

Business ethics is the study of how philosophical ethics is applied in a business setting.

Question 20

In the interests of preserving personal freedom, the law codifies all ethical requirements.

Question 21

Ethical reasoning is the process through which an individual applies his or her moral convictions or ethical standards to a current decision or dilemma.

Question 22

Under one theory of corporate social responsibility, corporations should promote goals that society deems worthwhile.

Question 23

Duty-based ethical standards often come from religious precepts.

Question 24

Any decision by the management of a company may significantly affect only the company ' s

A) officers and shareholders.
B) officers, shareholders, and suppliers, as well as the community, or society as a whole.
C) shareholders.
D) suppliers, the community, or society as a whole as well as the news media and local government.

Question 25

Under the principle of rights theory, one person's principles are as "right" as another's.

Question 26

Companies' actions in other nations generally go unnoticed by "corporate watch" groups that publicize unethical corporate behavior.

Question 27

A payment by a U.S. company to get a foreign government official to act in an official capacity to provide a business opportunity is not illegal.

Question 28

According to utilitarianism, whether an action affects a majority negatively is irrelevant.

Question 29

Ethics includes the study of what constitutes

A) right or wrong behavior.
B) financially rewarding behavior.
C) legal behavior.
D) religious behavior.

Question 30

Ethical standards based on religion involve an element of compassion.

Question 31

Judging a job applicant based on what an online search reveals about the applicant's activities outside the workplace universally is viewed as ethical.

Question 32

Duty-based ethical standards often come through philosophical reasoning.

Question 33

Gary is a driver with Fleet Trucking Inc. and transports hazardous waste. The company has warned Gary not to drive longer hours than federal regulations permit. One night, Gary drives for too many hours and has an accident near Home City where the spilled chemicals contaminate the local water source. If Fleet is accused of acting unethically, its best defense is that

A) the company acted responsibly by telling Gary to follow the hour limits.
B) the police of Home City have the ethical duty to make sure truck drivers pull over to sleep for the night.
C) the company has no responsibility to monitor Gary's compliance with the regulations.
D) Home City should have better protected its water source.

Question 34

In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals.

Question 35

One view of corporate social responsibility stresses that corporations have a duty just to shareholders.

Question 36

Ethics has to do with how a business person making business decisions applies

A) legal doctrine.
B) moral principles.
C) corporate guidelines.
D) financial priorities.

Question 37

A company that acts ethically, or in good faith, has a stronger position in litigation than a company that does not.

Question 38

Deb is a manager and wants to have an ethical workplace. She should do all of the following except

A) show her employees that she is committed to high standards.
B) set sales quotas for her staff that increase pressure for them to increase sales.
C) create an ethical code of conduct .
D) create trainings on ethical decision making for her staff.

Question 39

Under the principle of rights theory, the right with the highest value in a particular circumstance takes precedence.

Question 40

Because social media is so widespread, it is legal and ethical for a company to have social media policies limiting employees from criticizing the company.

Question 41

Fish n' Fries Restaurant Company makes products that can cause severe health problems to those with shellfish allergies. Fish n' Fries analyzes the cost of warning people of the risk (which they believe is obvious) and the risk of harm to people if no warning is included in advertising and on menus. This analysis most likely is part of

A) duty-based ethics.
B) corporate social responsibility.
C) religious ethical principles.
D) outcome-based ethics.

Question 42

An ethical code of conduct is not

A) law.
B) a set of rules that the company can enforce.
C) an outline of the company's policies.
D) a guide for decision makers facing ethical questions.

Question 43

Owen and other managers employed by Pastry Bakery are most likely to find that unethical behavior in the workplace can be deterred by

A) taking immediate action in response to unethical conduct.
B) imposing sanctions disproportionate to misconduct.
C) distributing rewards without regard to ethics.
D) ignoring small breaches of company rules.

Question 44

As CEO of Production, Inc., before making a decision Quinn always considers how he would like to be treated by others in the same situation. Quinn tends to make decisions based on

A) the categorical imperative.
B) the Golden Rule.
C) the principle of rights.
D) the Ten Commandments.

Question 45

Questions of what is ethical involve the extent to which a company has

A) a legal duty beyond those duties mandated by ethics.
B) an ethical duty beyond those duties mandated by law.
C) any duty beyond those mandated by both ethics and the law.
D) any duty when it is uncertain whether a legal duty exists.

Question 46

The management of Housemate, Inc., has decided that it will strictly comply with the law when making decisions.   Housemate will be making decisions based on

A) the moral minimum.
B) the highest ethical standard.
C) the categorical imperative.
D) the most valued rights.

Question 47

Cynthia is the chief financial officer of Digital Corporation. In that capacity, when she is unsure whether a certain business action is legal, she should act

A) in her own best interest.
B) honestly and responsibly.
C) in the short-run interest of Digital.
D) to maximize profit.

Question 48

Lloyd, an officer for Mulch 'n Fill, Inc., attempts to apply a duty-based approach to ethical reasoning in conflicts that occur on the job. This approach is based on the idea that a person must

A) achieve the greatest good for the most people and the least harm for the least number of people.
B) make the right choice for the right reason regardless of outcomes.
C) conform to society's ethical standards.
D) place his or her employer's interest first.

Question 49

Duty-based ethical standards are most likely derived from

A) a corporate ethics code.
B) a cost-benefit analysis.
C) philosophical reasoning.
D) the law.

Question 50

In making business decisions for Grounds Maintenance, Inc., the firm's personnel manager Flo applies her belief that persons have fundamental rights. This is

A) a religious rule.
B) the categorical imperative.
C) the principle of rights.
D) utilitarianism.

Question 51

If a company strictly complies with existing laws, the firm will

A) fulfill all business ethics obligations.
B) fulfill no business ethics obligations.
C) fulfill some business ethics obligations.
D) not need to fulfill any business ethics obligations.

Question 52

Lucas is a business manager for Manufacturing Co. Ethical dilemmas that Lucas is not likely to encounter include deciding

A) how to structure company meetings.
B) application of safety standards.
C) compliance with environmental regulations.
D) to handle rude interactions between employees. .

Question 53

To be effective in Hatchery Inc. and other large corporations, an ethical program should be monitored by

A) the honor system.
B) a committee that is separate from other corporate departments.
C) committees that are integrated into all corporate departments.
D) outside disinterested directors.

Question 54

The National Restaurant Association announces a new industry code of ethics. The effectiveness of this code will be determined by

A) the commitment of management to enforcing the code.
B) the similarity of the code to the employees' personal values.
C) the success of the campaign publicizing the code .
D) the relationship between the code and the law.

Question 55

When Tina, the chief executive officer of Sales & Revenue Corporation, evaluates a problem, she identifies the people who will be impacted, analyzes how they will benefit or be harmed, and then selects the choice that has the overall best profile. Tina bases her decisions in

A) utilitarianism.
B) the principle of rights theory.
C) religious principles.
D) the categorical imperative.

Question 56

The Public Company Accounting Oversight Board can do all of the following except

A) investigate violations of the Sarbanes-Oxley Act.
B) discipline accounting firms who violate the Sarbanes-Oxley Act.
C) change or amend the Sarbanes-Oxley Act.
D) inspect registered public accounting firms.

Question 57

Compliance with the law is not always sufficient to determine "right" behavior because

A) the law does not codify all ethical requirements.
B) company codes are also sources of law.
C) business decisions can have negative impacts.
D) ethical problems occur in business.

Question 58

The utilitarian theory of ethics does not require

A) a choice among alternatives to produce the maximum societal utility.
B) a determination of whom an action will affect.
C) an assessment of the effects of alternatives on those affected.
D) the acquiring of the means of production by workers.

Question 59

Meds Inc. develops a new drug that controls severe acne. The U.S. government has not approved the drug for sale in the United States because one of its ingredients is a banned chemical. This chemical is not banned in Mexico. Whether it is ethical for Meds to sell the drug in Mexico depends on

A) how much money the sales will make for the company.
B) the number of potential customers.
C) which legal standards are applied.
D) which ethical standards are applied.

Question 60

Egan manages the ethics compliance program of Farm2Store, Inc., an organic food distribution company. In that capacity, Egan is most likely not in charge of

A) communicating the importance of ethical conduct to employees.
B) ethical training seminars.
C) internal ethical audits.
D) ethical reviews of employees' family members.

Question 61

A cost-benefit analysis is part of

A) duty-based ethics.
B) Kantian ethics.
C) the principle of rights.
D) utilitarianism.

Question 62

Hale, research manager for Investor Fund, Inc., adheres to utilitarian ethics, according to which an action is morally correct when it produces the greatest good for

A) Hale.
B) Investor Fund.
C) the fewest people.
D) the most people.

Question 63

Under the principle of rights theory, a key factor in determining whether a business decision is ethical is how that decision

A) compares to religious principles.
B) affects the rights of others.
C) causes consequences that would follow if everyone acted the same way.
D) supports the right to make a profit.

Question 64

To avoid unethical practices by a foreign supplier, an effective business practice is to

A) pay foreign employees at U.S. pay rates.
B) have suppliers sign contracts affirming that they will behave ethically .
C) routinely monitor the foreign workplaces.
D) obtain a legislative decree that the supplier is ethical .

Question 65

Codex Marketing Inc. routinely makes payments to administrative employees in foreign countries in order to get paperwork processed in a timely manner. Codex

A) must file a report with the foreign government to disclose the payments.
B) must file paperwork with the U.S. State Department to disclose the payments .
C) must keep detailed and accurate accounting records of the payments .
D) is violating the Foreign Corrupt Practices Act .

Question 66

Frances, an executive with GMO Seed & Feed, Inc., has to decide whether to market a product that could offer substantial benefits but might also have potentially serious side effects for a small percentage of users. Using the different ethical philosophies discussed, analyze the decision.

Question 67

Dian and other officers of Extraction Corporation apply the utilitarian theory of ethics in business contexts. This theory focuses on

A) moral values.
B) religious beliefs.
C) the consequences of an action.
D) the nature of an action.

Question 68

When deciding to engage in corporate social responsibility , a key factor when selecting activities is

A) how the social activity relates to the business activities of the corporation.
B) h ow much free publicity the corporation will get from the social activity.
C) whether the corporation is required to do the social activity by law .
D) whether the activity will result in short-term profit increases .

Question 69

Recreation & Sports Equipment Corporation sells a profit-generating product that is capable of seriously injuring consumers who misuse it in a foreseeable way. They are contemplating adding a warning to the product but that warning will increase the cost of the product and they are worried that it may scare some potential customers who might not buy the product. Thinking about the two main theories of the role of business in society, discuss whether Recreation & Sports Equipment Corporation behaves ethically by continuing to sell the product without warning.

Question 70

The triple bottom line looks at all of the following except

A) how decisions impact profits and revenues .
B) how decisions impact sustainability and the planet .
C) how decisions impact employees and consumers .
D) how decisions impact the relationship between the U.S. and other nations .

Question 71

Construction Corporation makes a side payment to a minor government official in India to process paperwork. Under the Foreign Corrupt Practices Act, this is

A) prohibited.
B) permitted if the purpose is to secure a favorable contract.
C) permitted as a "grease" payment for ministerial actions.
D) permitted if the official is not a U.S. citizen.

Question 72

Plastic Paints, Inc. expends funds and takes steps to ensure that all employees are treated fairly and that the environmental impact of the corporation is minimal. This is the concept of

A) the moral minimum.
B) corporate social responsibility.
C) the categorical imperative.
D) utilitarianism.