Question 1

How does Gilligan evaluate the solution to Heinz's dilemma?

Accepted Answer

Gilligan's evaluation of Heinz's dilemma is that men tend to think in terms of justice, while women think in terms of caring. This suggests that men prioritize the law over saving a life, while women prioritize the human value of life over strict adherence to the law. Therefore, the best choice would be option C.

Question 2

Wanda is faced with an ethical dilemma.She knows her supervisor, the CFO, wants to accelerate the recoding of revenue to an earlier period to "make the numbers," but Wanda is convinced this would violate GAAP.If Wanda reasons at stage 4 of Kohlberg's model she is most likely to:

Accepted Answer

If Wanda reasons at stage 4 of Kohlberg's model, she is most likely to base her decision on rules, laws, and a sense of duty. Considering that she believes recording the revenue earlier would violate GAAP, refusing to record the transaction as desired by the CFO would be the most appropriate choice. This option aligns with Wanda's duty to follow rules and laws rather than prioritizing individual interests. Informing the board of directors could also be a valid choice, but it may not be necessary if Wanda takes action to uphold GAAP standards.

Question 3

Each of the following is an element of the operational issues to be considered in the decision making model except for the:

Accepted Answer

While ethical considerations may be important in the decision-making process, the method of moral reasoning is not typically included as an element of the operational issues to be considered. The other choices (culture of the organization, internal controls, and corporate governance system) are commonly considered operational issues that should be taken into account when making decisions within an organization.

Question 4

At which stage of Kohlberg's view on ethical development is an individual's actions influenced by group norms?

Accepted Answer

In Kohlberg's view on ethical development, stage 3 is referred to as the "good boy/girl" stage, where an individual's actions are influenced by group norms and a desire for social approval. This is the stage where individuals prioritize being seen as a "good person" in the eyes of others, and conform to societal expectations and rules.

Question 5

Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc.The company has a policy that all expenditures greater than $1,000 must be capitalized.Steve is under pressure from his supervisor to minimize capital expenditures less than $1,000 to keep earnings as high as possible.Steve decides to take two separate expenditures - one for $600 and the other for $900 - and he groups them into one expenditure so that the capitalization rules apply.Steve's actions can be characterized as:

Accepted Answer

Steve's actions are lacking in moral sensitivity as he is manipulating the expenditure amounts to avoid following the company policy. This is unethical behavior and could result in financial misrepresentation.

Question 6

In Thorne's model of ethical decision making, the instrumental virtues relate to:

Accepted Answer

The answer of In Thorne's model of ethical decision making,...

Question 7

In the development of a scale to measure professional skepticism, Hurtt, Eining and Plumlee identified the following three characteristics of skepticism that deal with examining evidence:

Accepted Answer

The three identified characteristics of skepticism that deal with examining evidence are a questioning mind, the suspension of judgment, and the search for knowledge. Option A does include a questioning mind and the suspension of judgment, but it misses the third characteristic of the search for knowledge. Option B includes a questioning mind and the search for knowledge, but it omits the suspension of judgment. Option D has the search for knowledge and an independent attitude, but it misses the importance of a questioning mind and the suspension of judgment. Therefore, option C is the best choice as it includes all three identified characteristics.

Question 8

In the Faulty Budget case, Jackson Daniels should:

Accepted Answer

Admitting the mistake to top management at the earliest possible time is the best course of action because it demonstrates integrity and accountability, and allows for corrective action to be taken as soon as possible. Delaying reporting or covering up the mistake can ultimately lead to bigger problems down the line. Letting someone else take responsibility for the mistake is also not acceptable, as it is Jackson Daniels' responsibility as the head of finance to ensure accurate budgeting.

Question 9

Keesha is the CEO of a publicly-owned company.She was informed by the CFO that the company's earnings were down 30 percent from the prior year due to the recession.The company's stock price has declined by 20 percent.The CFO comes up with a scheme to hide debt and inflate revenues by selling underperforming assets to a special purpose entity affiliated with the company.Keesha is concerned about possible affects on the creditors but ultimately she agrees to the accounting.Keesha is reasoning at:

Accepted Answer

The answer of Keesha is the CEO of a publicly-owned...

Question 10

Role expectation or approval from others is a motive for doing right is which state of Kohlberg's moral reasoning?

Accepted Answer

Role expectation or approval from others is associated with the "Fairness to others" stage, which is part of the conventional level of Kohlberg's moral reasoning, where individuals conform to social norms and seek approval from others.

Question 11

Rosie is the external auditor of Texas Two Steps, a privately-owned dance company in Texas.Rosie believes the owner of the company is skimming cash off the top.She approaches the owner who explains that the money will be replaced in the following month after he refinances his house.Rosie accepts the owner's explanation but reclassifies the expenditure as a receivable of the company from Rosie.Rosie's reasoning best reflects:

Accepted Answer

The answer of Rosie is the external auditor of Texas...

Question 12

The importance of framing the ethical issue in the decision making model is:

Accepted Answer

Framing the ethical issue helps provide a perspective to apply the decision making model to specific facts of the case. It helps to identify the core values, beliefs, and principles that are relevant to the case and to define the boundaries of the issue. This enables the decision maker to focus on the key ethical considerations and to make a well-informed decision that aligns with their ethical values and the values of the organization. The other choices are important, but they are not directly related to framing the ethical issue.

Question 13

The need to exercise professional skepticism in auditing can be linked to:

Accepted Answer

The answer of The need to exercise professional skepticism in...

Question 14

Rest's components of a moral model include all but

Accepted Answer

Rest's components of a moral model include moral sensitivity, moral judgment, and moral character. Moral development is not explicitly included, though it could be argued to fall under the umbrella of moral character.

Question 15

The 2008 inspections of CPA firms that audit public companies indicated that:

Accepted Answer

The 2008 inspections of CPA firms that audit public companies indicated that both a lack of professional skepticism and the selection of audit procedures are serious problems for auditors.

Question 16

Each of the following considerations should help to evaluate alternative courses of action in the decision making model except for:

Accepted Answer

The stage of moral development of the decision maker is not a relevant consideration for evaluating alternative courses of action in the decision-making model. The other considerations, such as consistency with professional standards, firm policies and code of ethics, and potential harms and benefits, are all important factors to consider in making ethical decisions.

Question 17

In Cherron and Lowe's study of the link between professional skepticism and management accountants, the authors identified the importance of:

Accepted Answer

The answer of In Cherron and Lowe's study of the...

Question 18

Leroy audits the financial statements of a small business.During the course of his audit he notices that all five members of top management have purchased new BMWs.Given that each manager's salary is less than $100,000 per year, Leroy becomes suspicious about how all five of them were able to buy such an expensive automobile.He decides to double check the bank statements for the year and postings to expense accounts that might indicate improper expenditures.Leroy's actions demonstrate:

Accepted Answer

Leroy's actions demonstrate professional skepticism, objective decision making, and due care. Professional skepticism is the attitude that an auditor should maintain when performing an audit, which involves questioning the information provided by the client and being alert to the possibility of fraud or error. Objective decision making is the ability to make decisions without being influenced by personal biases or preferences. Due care is the level of care that a reasonable person would exercise in similar circumstances.

Question 19

In Kohlberg's six stages of moral development, the stage that follows obedience in the pre-conventional stage is:

Accepted Answer

The answer of In Kohlberg's six stages of moral development,...

Question 20

The ethical decision making model described in the chapter helps to:

Accepted Answer

The ethical decision making model described in the chapter helps to organize the various elements of ethical reasoning and professional judgment, evaluate stakeholder interests using ethical reasoning, and identify and select alternative courses of action. Therefore, all of the above are the best choice to describe how the model helps.

Quiz 2: Accountants Ethical Decision Process and Professional Judgment