Question 1

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

Accepted Answer

A) Fairness to others 
B) Obedience 
C) Self-chosen principles 
D) Law and order

Question 2

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

Accepted Answer

A) Whether the alternatives are consistent with professional standards 
B) Whether the alternatives are consistent with firm policies and its own code of ethics 
C) The stage of moral development of the decision maker 
D) The potential harms and benefits of alternative courses of action

Question 3

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

A) Lacking in of moral sensitivity 
B) Lacking in professional skepticism 
C) Loyal to the company's best interests 
D) All of the above

Question 4

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

Accepted Answer

A) Identify the stakeholders affected by intended actions 
B) Evaluating alternative courses of action using moral reasoning methods 
C) Identify the accounting issues present in a case 
D) Providing a perspective to apply the decision making model to specific facts of the case

Question 5

In the DigitPrint case, at which stage does Wally Wonderful reason if he insists on compliance with GAAP?

Accepted Answer

A) Stage 2 
B) Stage 3 
C) Stage 4 
D) Stage 5

Question 6

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

A) Professional skepticism 
B) Objective decision making 
C) Due care 
D) All of the above

Question 7

Professional judgment in accounting includes each of the following attributes except for:

Accepted Answer

A) Exercising due care in carrying out one's professional responsibilities 
B) Maintaining one's objectivity in decision making 
C) Maintaining one's integrity in decision making 
D) Acting in accordance with the moral point of view

Question 8

In the Phar-Mor case, Pat Finn's actions reflect ethical reasoning at what stage?

Accepted Answer

A) Stage 1 
B) Stage 2 
C) Stage 3 
D) Stage 4

Question 9

What is the ethical dilemma in Supreme Designs?

Accepted Answer

A) Compensation to executives of a company. 
B) Cover up of fraud. 
C) Insubordination of an employee. 
D) Unapproved loans to executives.
Essay Questions

Question 10

The actions of Sherron Watkins in the Enron case appears to reflect each of the following except for:

Accepted Answer

A) Moral sensitivity 
B) Egoism 
C) Enlightened egoism 
D) Professional skepticism

Question 11

Why is it important for management accountants to adopt an attitude of professional skepticism?

Accepted Answer

The answer of Why is it important for management accountants...

Question 12

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

Accepted Answer

A) Women think saving a life is more important than keeping the law. 
B) Men think keeping the law is more important than saving a life. 
C) Men tend to think in terms of justice, and women in terms of caring. 
D) Men misunderstand and women understand.

Question 13

Individuals who reason at stage 6 incorporate ethical reasoning based on:

Accepted Answer

A) The morality of law and duty to the social order 
B) A rational calculation of benefits and harms to society 
C) Universal ethical principles 
D) All of the above

Question 14

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

Accepted Answer

A) Organize the various elements of ethical reasoning and professional judgment 
B) Evaluate stakeholder interests using ethical reasoning 
C) Identify and select alternative courses of action 
D) All of the above

Question 15

The cognitive development approach refers to:

Accepted Answer

A) The thought process followed in one's moral development 
B) The method of moral reasoning used in decision making 
C) The exercise of professional judgment in decision making 
D) All of the above

Question 16

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

A) Stage 1 
B) Stage 2 
C) Stage 3 
D) Stage 4

Question 17

Professional skepticism means:

Accepted Answer

A) Approaching the audit with an independent attitude 
B) Approaching the audit with a questioning mind 
C) Being objective in decision making 
D) Maintaining one's integrity

Question 18

The main accounting issue in the Juggyfroot case is:

Accepted Answer

A) How to account for prepaid capacity 
B) How to account for and report special purpose entities 
C) How to account for inventory declines 
D) How to account for investments in marketable securities

Question 19

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

A) A questioning mind, the suspension of judgment, and an independent attitude 
B) A questioning mind, the search for knowledge and an independent attitude 
C) A questioning mind, the suspension of judgment and the search for knowledge 
D) The suspension of judgment, the search for knowledge and an independent attitude

Question 20

Kohlberg's model can best be described as:

Accepted Answer

A) The various phases in one's moral development and related levels of moral reasoning 
B) A model of ethical action that is based on one's moral development 
C) A predictive tool to determine how a person will reason ethically based on one's moral development 
D) A model of age-specific levels of moral reasoning

Exam 2: Accountants Ethical Decision Process and Professional Judgment