Question 1

Which philosophical approach requires that an ethical decision depend upon the duty, rights, and justice involved?

Accepted Answer

A)   consequentialism
B)   virtue ethics
C)   duty ethics
D)   righteousness
E)   deontology E

Question 2

Which of the following is a fundamental factor in having an effective ethical corporate culture?

Accepted Answer

A)   tone at the top (i.e., ethical leadership) 
B)   efficient oversight by the company's Board of Directors
C)   workplace ethics
D)   code of conduct
E)   tone at the top and workplace ethics E

Question 3

Which of the following is NOT a trend described in Chapter 1 as having an impact on the ethics of business?

Accepted Answer

A)   directors' legal liability
B)   management's stated intention to protect reputation
C)   auditors' legal liability
D)   management's assertions to shareholders on the adequacy of internal controls
E)   management's stated intention to manage risk C

Question 4

Which of the following would be a key control function of the Board of Directors?

Accepted Answer

A)   to set guidance and boundaries
B)   to appoint the CEO
C)   to approve the sale of company's assets
D)   to decide on the company's auditor
E)   All of these are correct.

Question 5

Professional accountants, in their fiduciary role, owe their primary loyalty to

Accepted Answer

A)   the accounting profession.
B)   the client.
C)   the general public.
D)   government regulations.
E)   All of these are correct.

Question 6

Which organization is developing an international code of conduct for professional accountant?

Accepted Answer

A)   International Accounting Standards Board
B)   European Federation of Accountants
C)   Financial Accounting Standards Board
D)   Public Accounting Oversight Board
E)   International Federation of Accountants

Question 7

The Modified Moral Standards Approach focuses on which of the following dimensions of the impact of a proposed action?

Accepted Answer

A)   net benefit to society, fair to all stakeholders, whether it is right, and virtues expected
B)   net benefit to society and whether it is legal
C)   net benefit to society, fair to all stakeholders, and whether it is legal
D)   fair to most stakeholders and whether it is right
E)   net benefit to society, fair to most stakeholders, and whether it is right

Question 8

Ethical corporate behavior is expected to lead to

Accepted Answer

A)   higher profitability in the short-term.
B)   higher profitability both in the short-term and long-term.
C)   lower profitability in the long-term.
D)   higher profitability in the long-term.
E)   lower profitability both in the short-term and long-term.

Question 9

Examining the interests of stakeholders is probably required for

Accepted Answer

A)   high short-term profits.
B)   optimal medium and longer-term profits.
C)   continuing support from stakeholder groups.
D)   effective risk management.
E)   All of these are correct.

Question 10

Not reporting environmental issues is an example of

Accepted Answer

A)   lack of transparency.
B)   lack of integrity.
C)   lack of accuracy.
D)   All of these are correct.
E)   None of these are correct.

Question 11

Effective crisis management could represent

Accepted Answer

A)   an opportunity to avoid costs.
B)   an opportunity to change employees' perspectives on risk.
C)   an opportunity to enhance the company's reputation.
D)   All of these are correct.
E)   None of these are correct.

Question 12

Which of the following are determinants of reputation?

Accepted Answer

A)   trustworthiness and responsibility
B)   credibility, responsibility and relevance
C)   responsibility and impartiality
D)   relevance and impartiality
E)   relevance, credibility and responsibility

Question 13

The difference between what the public thinks it is getting in audited financial statements and what the public is actually getting is known as the

Accepted Answer

A)   credibility gap.
B)   expectations gap.
C)   audit gap.
D)   stewardship gap.
E)   None of these are correct.

Question 14

Incomplete disclosure of the company's revenue recognition policy is an example of

Accepted Answer

A)   lack of transparency.
B)   lack of integrity.
C)   lack of accuracy.
D)   All of these are correct.
E)   None of these are correct.

Question 15

Which corporate report discusses subjects that include environmental, health and safety, philanthropic and other social impacts?

Accepted Answer

A)   corporate annual report
B)   corporate social responsibility report
C)   corporate quarterly report
D)   corporate stakeholder report
E)   corporate ethics committee report

Question 16

Which of the following are examples of ethics risks faced by employees?

Accepted Answer

A)   honesty and integrity
B)   fairness and compassion
C)   integrity and responsibility
D)   fairness and integrity
E)   responsibility and honesty

Question 17

Since the mid-1990s, both management and auditors have become increasingly

Accepted Answer

A)   profit management oriented.
B)   ethics oriented.
C)   value management oriented.
D)   risk management oriented.
E)   ethics oriented and risk management oriented.

Question 18

Companies attempt to manage the risk of something happening that will have a negative or positive impact on the company's objectives, such as

Accepted Answer

A)   credit risks.
B)   litigation risk.
C)   reputation risk.
D)   ethics risks.
E)   All of these are correct.

Question 19

Most large corporations do not consider which these risks in a broad and comprehensive way?

Accepted Answer

A)   operational risks
B)   reputational risks
C)   credit risks
D)   market risks
E)   ethics risks

Question 20

A value that is almost universally respected by stakeholder groups is a

Accepted Answer

A)   super norm.
B)   alfa norm.
C)   value norm.
D)   hypernorm.
E)   general norm.

Exam 1: Ethics Expectations.