83 test bank for ethical obligations and decision making in accounting 3rd

83 Test Bank for Ethical Obligations and Decision
Making in Accounting 3rd
Empathy entails all of the following characteristics of behavior except
for:
1.

A. Being loyal to one's friends

2.

B. Being understanding of one's friends

3.

C. Being sensitive to the feelings of one's friends

4.

D. All of these

The biggest problem in implementing a rights approach to decision
making is:
1.

A. The interests of others may be subservient to self-interests

2.

B. It is difficult to weigh harms and benefits

3.

C. It relies on moral absolutes

4.

D. It can be difficult to determine criteria to distinguish equals from unequal
claims

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:
1.

A. Believes there is a clear violation of the law

2.

B. Contacts his/her immediate superior who says to forget about the matter

3.

C. Informs the external auditors who tell him/her to inform the appropriate
authorities

4.

D. Believes there has been an ethical violation

The method of ethical reasoning that does not deal with making
decisions after considering the interests of others is:
1.

A. Egoism

2.

B. Enlightened Egoism

3.

C. Utilitarianism


4.

D. Rights Theory

The ethical reasoning method that is based on treating equals,
equally and unequals, unequally is:
1.

A. Enlightened egoism

2.

B. Act utilitarianism

3.

C. Justice

4.

D. Virtue

Which of the following situations would be considered ethical?
1.

A. The cashier at Wal-Mart gives you $5 more than you were supposed to
receive and you don't do anything about it

2.

B. You accidentally back into a car at Wal-Mart and leave your information for
them to call

3.

C. Receiving fake $20 bills and using them in a store while knowing they are
fake

4.

D. Finding a phone in a restaurant and keeping it

Each of the following is an element of trustworthiness according to
the Josephson Institute except for:
1.

A. Reliability

2.

B. Loyalty

3.

C. Fairness

4.

D. Honesty

The Public Interest Principle in the AICPA Code of Professional
Conduct recognizes:
1.

A. The importance of integrity in decision making

2.

B. The importance of stakeholder groups

3.

C. The need to be independent of the client

4.

D. The importance of exercising objectivity in decision making

Aristotle believed that __________ always preceded the choice of
action.


1.

A. Empathy

2.

B. Due Care

3.

C. Deliberation

4.

D. Loyalty

The Independence Principle in the AICPA Code applies to:
1.

A. All accountants and auditors

2.

B. All CPAs regardless of professional services

3.

C. All CPAs who render attestation services

4.

D. All members of the audit committee

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:
1.

A. Accuse the alleged cheater of cheating in front of all the other players

2.

B. Consider what might happen if he accuses the player of cheating and he is
wrong

3.

C. Speak to the alleged cheater during a regularly scheduled break and tell him
not to do it again

4.

D. Forget about the whole matter

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:
1.

A. Ignore the situation because Janice doesn't know why the manager pocketed
the money

2.

B. Inform her immediate supervisor of what she observed

3.

C. Tell another staff accountant who is a friend and ask for her advice

4.

D. Tell Obama or Biden

Each of the following elements make up an integral part of what is
meant by "ethics" except for:


1.

A. Accepted standards of behavior

2.

B. Knowing the difference between right and wrong

3.

C. Always following the law

4.

D. The moral point of view

The Rights Theory incorporates all of the following elements except
for:
1.

A. Act based on the consequences of one's actions on others

2.

B. Treat people as an end and not merely as a means to an end

3.

C. Act in a way you would want others to act in similar situations

4.

D. All of these

Objectivity requires that a CPA should:
1.

A. Maintain a mental attitude of impartiality

2.

B. Maintain a mental attitude of intellectual honesty

3.

C. Be free of conflicts of interest

4.

D. All of these

Deontology deals with
1.

A. Emphasizes rights of others

2.

B. Consequences of actions

3.

C. Following prescribed virtue characteristics

4.

D. Following the law as an element of ethical behavior

Responsibility goes hand in hand with:
1.

A. Respect

2.

B. Loyalty

3.

C. Courage

4.

D. Accountability

The biggest problem in applying virtue theory to decision making is:
1.

A. It can be difficult to evaluate the effect of virtues on others in decision making

2.

B. It relies on moral absolutes in decision making


3.

C. It can be difficult to determine virtues to distinguish equals from unequal
claims in decision making

4.

D. Conflicts between virtues may make decision making more difficult

The method of ethical reasoning that requires selecting the correct
moral rule that produces the greatest benefits over harms is:
1.

A. Act Utilitarianism

2.

B. Rule Utilitarianism

3.

C. Rights Theory

4.

D. Justice

Treating other fairly encompasses treating them:
1.

A. Equally, impartially, and responsibly

2.

B. Equally, responsibly, and openly

3.

C. Impartially, openly, and diligently

4.

D. Equally, impartially, and openly

Ethical relativism can best be described as a:
1.

A. Point of view that morality is relative to the norms of one's culture.

2.

B. Concept that holds that integrity should be maintained in the face of pressure
by others.

3.

C. An ethical reasoning method that holds one should always act out of selfinterest.

4.

D. An ethical reasoning method that holds one should always consider the
effect of one's actions on others.

The ancient Greeks thought of the virtues as characteristics of
behavior that:
1.

A. Could lead to a good life

2.

B. Make up the "six pillars of character"

3.

C. Support the rights theory

4.

D. All of these

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


1.

A. The interests of others may be subservient to self-interests

2.

B. It fails to consider the interests of others

3.

C. It can be difficult to evaluate the consequences of actions

4.

D. It relies on moral absolutes

Each of the following characteristics describes the importance of
integrity in decision making except for:
1.

A. Acting out of moral principle

2.

B. Being loyal to one's superior

3.

C. Having the courage to do the right thing

4.

D. Not subordinating professional judgment to others

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?
1.

A. Egoism

2.

B. Justice

3.

C. Virtue ethics

4.

D. Utilitarianism

Teleology deals with
1.

A. Consequences of actions

2.

B. Fairness to others

3.

C. Respecting the rights of others

4.

D. Following prescribed virtue characteristics

What is the common characteristic of Aristotle's virtues and ethical
standards for CPAs?
1.

A. Truthfulness

2.

B. Integrity

3.

C. Loyalty


4.

D. Due care

Respect is an important character of behavior because:
1.

A. It entails a loyalty obligation to one's superior

2.

B. It enables one to perform professional services competently

3.

C. It is critical to maintaining one's integrity

4.

D. It encompasses attributes of how we should treat others

Eddie paid an $8 restaurant check with a $10 bill. The waitress gave
him $12 back. The most ethical action for Eddie is to:
1.

A. Keep the extra $10

2.

B. Inform the waitress of her overpayment

3.

C. Inform the manager of the restaurant of the overpayment

4.

D. Leave a larger tip for the waitress

If one's reputation is tainted it may create a:
1.

A. Conflict of interests

2.

B. Loss of independence

3.

C. Lack of trust

4.

D. All of these

The credibility standard in the Statement of Ethical Professional
Practice of the IMA requires that an accounting professional should:
1.

A. Communicate information fairly and objectively

2.

B. Disclose all relevant information that might affect the intended user's
understanding of the reports, analyses or recommendations

3.

C. Disclose delays or deficiencies in information, timeliness, processing or
internal controls in conformance with organization policy and the law

4.

D. All of these

An accountant who blows the whistle on financial wrongdoing by
his/her employer by going outside the entity violates:
1.

A. The due care principle

2.

B. Confidentiality


3.

C. One's reliability obligation

4.

D. All of these

When is it appropriate to contact the audit committee about a
difference of opinion with the CFO over an accounting or financial
reporting manner?
1.

A. If the CFO does not agree to correct the financial statements

2.

B. The CEO supports the CFO and does not agree to correct the financial
statements

3.

C. The external auditors support the CEO and do not agree to correct the
financial statements

4.

D. The audit committee should always be the first to be informed about such a
difference of opinion

An internal accountant should always consider taking each the
following steps after exhausting all avenues of appeal within the
organization when there is a difference of opinion with top
management on an accounting or financial reporting matter except
for
1.

A. Inform the SEC

2.

B. Terminate employment with the entity

3.

C. Seek legal advice before taking any action

4.

D. All of these

Each of the following describes the behavior of Cynthia Cooper in the
WorldCom fraud except for:
1.

A. Persistence

2.

B. Competence

3.

C. Integrity

4.

D. Hesitance

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?


1.

A. Allow Sally to use the dictionary since she is at a disadvantage

2.

B. Not allow Sally to use the dictionary because she should know enough
English to get by

3.

C. Allow the other students to bring in some tool to give them an advantage

4.

D. None of these

The method of ethical reasoning that evaluates actions in terms of
harms and benefits is:
1.

A. Act Utilitarianism

2.

B. Rights Theory

3.

C. Justice

4.

D. Virtue

A CPA would violate the Due Care Principle if he/she:
1.

A. Undertook a professional engagement without having the requisite
background, knowledge and experience

2.

B. Discloses confidential information about a client

3.

C. Violates the Public Interest Principle

4.

D. Performs tax services for an audit client without audit committee approval

Each of the following is a pillar of character according to the
Josephson Institute except for:
1.

A. Caring

2.

B. Citizenship

3.

C. Respect

4.

D. Judgmental

83 Free Test Bank for Ethical Obligations and Decision
Making in Accounting 3rd Edition by Mintz Multiple
Choice Questions - Page 2
In the Harvard Cheating Scandal case, using ethical reasoning who
is at fault for situation?
1.

A. The professor

2.

B. Teaching assistants

3.

C. Students who cheated

4.

D. All of these

Thomas Jefferson's writing in the preamble of the Declarations of
Independence is a perfect example of what theory?
1.

A. Rights Theory

2.

B. Virtue Theories

3.

C. Consequentialist Theories

4.

D. Applied Ethics

What is the one virtue that people should want in a boss to trust the
boss?
1.

A. Diligence

2.

B. Commitment

3.

C. Honesty

4.

D. Sense of humor

Virtue ethics is
1.

A. Doing what is right

2.

B. One's duty to act in a socially acceptable manner

3.

C. One's ability to meet or exceed their potential

4.

D. What one ought to do when presented with an ethical dilemma

Utilitarian philosophers are divided into two types: act utilitarian and
1.

A. Rule utilitarian

2.

B. Individual utilitarian

3.

C. Ethical utilitarian

4.

D. Benefit utilitarian

In the Capitalization versus Expensing case the main ethical issue is
whether Gloria Hernandez should
1.

A. Capitalize or expense $1 million of expenditures

2.

B. Report her superiors actions to the CEO


3.

C. Talk to the Audit Committee

4.

D. Become a whistle blower

Many critics say the biggest fault with deontological theories is
1.

A. no clear way to resolve conflicts between moral duties

2.

B. the separation of consequences from duties

3.

C. the requirement to respect people as human beings

4.

D. not being able to treat people as only a means

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

primarily because
1.

A. He wanted to improve earnings to increase the share price of company stock

2.

B. The treatment recommended by the owner for estimating overhead
conformed to GAAP

3.

C. He was the sole owner of the company and controlled the board of directors

4.

D. All of these

A difficult choice between two moral principles that are in conflict with
one another is known as a/an:
1.

A. ethical behavior

2.

B. gray area

3.

C. ethical dilemma

4.

D. pragmatism

Assume you are taking an exam and you see that your friend is
cheating. Your professor does not notice it. What should you do if you
are trustworthy person?
1.

A. You pretend not to know it.

2.

B. You tell your professor immediately.

3.

C. You also cheat the exam because your friend does.

4.

D. You talk to the friend and advise him or her to confess.

An important modern contributor to the theory of utilitarianism is:
1.

A. Plato

2.

B. John Rawls

3.

C. Immanuel Kant

4.

D. Jeremy Bentham

Egoists maintain a general principle of the following sort:
1.

A. "One ought always act in others' interest"

2.

B. "One ought always act in one's and others' interests"

3.

C. "One ought always act in peer group's interest"

4.

D. "One ought always act in one's own interest"

Greatest good for the greatest number of people is the theory of.
1.

A. Rights

2.

B. Deontology

3.

C. Utilitarianism

4.

D. Justice

The best restatement of Kant's categorical imperative is:
1.

A. Do to others as you would have everyone do unto you

2.

B. Consider others needs before you act

3.

C. That those with a smaller stake should have a smaller say compared to
those with a bigger stake.

4.

D. Don't be cruel until someone is cruel to you

In the Giles and Regas case, the primary ethical issue can be stated
as:
1.

A. Whether a subordinate should blow the whistle on a superior who has
violated ethical policy

2.

B. Whether two staff members of the same rank should be allowed to date

3.

C. Whether a superior should become involved in a dating relationship with a
subordinate

4.

D. Whether a student should renege on the acceptance of an offer from one
firm after receiving an offer from a second firm

The relationship between legal and ethical is that


1.

A. Ethical always follow the law

2.

B. Ethical requires less than legal

3.

C. Legal and ethical are the same thing

4.

D. Ethical behavior requires us to do more than required by the law and less
than the law allows

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. If you are a person of integrity, what should you do?
1.

A. Go along with the manager's request

2.

B. Talk to others in the company to determine how they handled such situations

3.

C. Refuse to go along with the request

4.

D. Inform the audit committee

In the NYC Subway Death case, the reason that no bystanders
helped Ki-Suck Han was probably due to:
1.

A. Moral blindness and ethical fading

2.

B. Bystander effect and moral blindness

3.

C. Blind spot and moral blindness

4.

D. Ethical fading and bystander effect

In the Faulty Budget case, the primary ethical issue can be stated
as:
1.

A. Whether an accountant should admit to a mistake once he has discovered it

2.

B. Whether an accountant should be given a poor performance review because
of a mistake

3.

C. Whether an accountant should follow the advice of a friend in resolving an
ethical dilemma

4.

D. Whether an accountant should inform the external auditors about a problem
with the budget

The country with the highest Uncertainty Avoidance is
1.

A. United States

2.

B. United Kingdom


3.

C. India

4.

D. China

When applying Utilitarianism to judge actions, what is the only thing
that matters?
1.

A. Motives

2.

B. Justice

3.

C. Consequences

4.

D. Rights

The most important duty of public accounting is to the:
1.

A. Securities Exchange Commission

2.

B. Current stockholders

3.

C. Management

4.

D. Investing public

The ethical issue in the Telecommunications case can best be
described as:
1.

A. Is a payment to a foreign government official to grease the wheels for the
delivery of imported goods a violation of the Foreign Corrupt Practices Act

2.

B. Is a bribe to a foreign government official to win a competitively bid contract a
violation of the Foreign Corrupt Practices Act

3.

C. Is it a conflict of interests for employees to accept payments or other gifts
when they are involved in the decision or execution of a contract for the party
making the payment or gift

4.

D. Is it a conflict of interest for a member of management to make a decision on
awarding a contract to one company when that person has a relative working for
the company

The country with the highest Power Distance score is
1.

A. United States

2.

B. United Kingdom

3.

C. Japan

4.

D. Russia


"Do that action which will bring about the greatest good for the
greatest number of people," is the basic concept of which ethical
theory?
1.

A. egoism

2.

B. deontology

3.

C. utilitarianism

4.

D. virtue ethics

According to Kant, individuals may be treated as:
1.

A. means to an end

2.

B. an end and never as a means only

3.

C. other mammals since we are all equal

4.

D. an end and never as a means, in some circumstances

Which theory is based on doing what is right despite the
consequences?
1.

A. Deontology

2.

B. Virtue ethics

3.

C. Teleology

4.

D. Egoism

Virtue ethics emphasizes development of good habits of character.
What should be the greatest reward of practicing good habits of
character, according to MacIntyre?
1.

A. External rewards

2.

B. Money

3.

C. Internal rewards

4.

D. Authority of rules

The philosophical belief that you should judge the result, not the
action (end justifies the means) is?
1.

A. Utilitarianism

2.

B. Deontology

3.

C. Justice


4.

D. Virtue ethics

The cultural value of Individualism reflects
1.

A. The degree a society reinforces individual or collective achievement

2.

B. Tolerance for uncertainty and ambiguity in society

3.

C. The degree of equality between people in a society

4.

D. Whether a society has a long-term or short-term orientation

The most likely rationalization a student might use to justify cheating
on an exam is:
1.

A. Ethical relativism

2.

B. Situational ethics

3.

C. Deontological ethics

4.

D. Teleological ethics

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:
1.

A. Loyalty

2.

B. Integrity

3.

C. Caring

4.

D. Civic responsibility

When an employee is given a job evaluation, he has a right to
expect
1.

A. Fair, but honest evaluations

2.

B. Glowing reports

3.

C. 360 degree evaluations from everyone in the firm

4.

D. Evaluations of technical, not personal skills

Kant's categorical imperative principle suggests that:
1.

A. Only equals should be treated equally


2.

B. Everyone should be treated as a free and equal person

3.

C. Everyone should be treated unequally

4.

D. Only the elite are treated equally

In the Lone Star School District case, the auditors were mostly
concerned about:
1.

A. The behavior of a staff member toward client personnel

2.

B. The falsification of the financial statements

3.

C. The lack of independence of the audit team

4.

D. The lack of documentation for travel and entertainment expenses

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. The best thing for Jason to do is:
1.

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

2.

B. Approach his supervisor to discuss the matter

3.

C. Ignore what is being asked and go about his work as he has always done

4.

D. Tell the other staff members to mind their own business

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?
1.

A. Utilitarianism

2.

B. Deontology

3.

C. Egoism

4.

D. Justice

Aristotle defined __________ as a trait of character manifested in
habitual action.
1.

A. Virtue

2.

B. Ethics

3.

C. Morals

4.

D. None of these

The main issue in the Reneging on a Promise case is:
1.

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

2.

B. Should Regas back off from the dating relationship she developed with Giles

3.

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

4.

D. Should Tybell quit the firm because of conflicts with his superiors

The noted researcher who studied how values in the workplace are
influenced by culture is:
1.

A. Thomas Hobbes

2.

B. Jeremy Bentham

3.

C. Aristotle

4.

D. Geert Hofstede

Michael Josephson, founder of the Josephson Institute of Ethics, is
credited for developing
1.

A. Book of virtues

2.

B. Care and response orientation

3.

C. Six Pillars of Character

4.

D. Rights theory

Kevin Lowe's ethical dilemma in the Eating Time case can best be
described as whether to:
1.

A. Date another staff member of the CPA firm

2.

B. Inform his supervisor about a lack of diligence of other staff accountants

3.

C. Quit his job because he can't meet the firm's expected quality of work

4.

D. Devote time on an audit and not charge it to the job


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:
1.

A. Integrity

2.

B. Due care

3.

C. Independence

4.

D. Responsibility

The motive of "duty" is most associated with.
1.

A. Egoism

2.

B. Deontology

3.

C. Utilitarianism

4.

D. Justice